11.02.25 - Interest rates - key topic for next 2 days

The key focus and potential key market driver over the next two days will be US monetary policy, particularly interest rates. Federal Reserve Chairman Jerome Powell is set to testify before Congress tonight and tomorrow, addressing economic conditions amid near-full employment and expectations of easing inflation. His comments will be closely watched for insights on uncertainties surrounding tariffs, immigration, and the broader impact of trade and other policies under the Trump administration, which continue to evolve.
We will get new insights into inflation tomorrow afternoon, with the release of January’s data. Analysts anticipate that price levels will remain stable or ease slightly.

Markets: US interest rates have begun to rise slightly since yesterday. The 10-year Treasury yield has climbed back above 4.5% after briefly approaching 4.4% just a few days ago. In comparison, yields stood at 4.8% back in January.

My View: Jerome Powell is likely to reaffirm the Fed’s rather cautious and go-slow approach, which could keep yields from making significant moves. However, with markets still pricing in some rate cuts this year, there may be further room for yields to decline, unless the inflation data tomorrow shows a different pattern.

Meanwhile, market sentiment remains on edge as indices approach technically overbought levels combined with a very bullish stance, adding to the potential for volatility.

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