February 27, 2018
Jerome Powell emphasized the strengths of the economy though he wouldn't say whether four Fed rate hikes, instead of three, are this year's likely call. Powell pointed to a general rise for the economy and its indicators though today's data are mixed. Durable goods fell sharply at the headline level and included a second straight dip for core capital goods. Another negative is January's advance trade report where, in a sign of cross-border weakness, both goods exports and goods imports fell. The day's positive news is led once again by the consumer confidence report where readings, especially for the labor market, keep rising to new highs along with Case-Shiller and FHFA home price data that are both showing steady appreciation above the 6 percent level.
Rate hike concerns on Powell's comments made for a 1.2 percent sell-off in the Dow to 25,410. Demand for short-term Treasuries, which typically sinks on expectations of rate hikes, eased with the 2-year yield up a noticeable 4 basis points to 2.27 percent. Rate hikes are typically a positive for the dollar as the dollar index rose 0.6 percent to 90.38. Gold, which doesn't pay a yield and often sinks when rates move up, fell nearly $15 to $1,320. Oil slipped $1 to just under $63.