March 07, 2023 15:08 GMT
Markets Interpret Powell's Testimony as Hawkish, Boosting Greenback
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- Markets err hawkishly in response to the initial coverage of Powell's testimony, with markets narrowing in on the Chair's mention of possibly larger rate hikes as well as a higher terminal rate.
- The greenback and yields move higher in tandem, while emerging market currencies and equities are knocked lower. The e-mini S&P drops over 25 points in the immediate reaction, while EUR/USD, GBP/USD plumb fresh session lows.
- The Treasury yield curve extends inversion, with 2y10y spread hitting a new low at -96.976.