Powell Says Credit Crunch Could Mitigate Need For Higher Rate, Bernanke Emphasizes 'It's Different Than 2008'
Portfolio Pulse from Piero Cingari
Fed Chair Jerome Powell suggests interest rates may not need to climb as high due to tightening bank lending conditions, while former Fed Chair Ben Bernanke emphasizes the current situation is different from 2008. Market expectations for a June rate hike dropped, impacting the iShares U.S. Treasury Bond ETF (GOVT) and the SPDR S&P 500 ETF Trust (SPY).
May 19, 2023 | 4:41 pm
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POSITIVE IMPACT
Market expectations for a June rate hike dropped, causing the iShares U.S. Treasury Bond ETF (GOVT) to rebound as yields fell across the board.
The drop in market expectations for a June rate hike led to a decrease in yields, which in turn caused the iShares U.S. Treasury Bond ETF (GOVT) to rebound. This is because bond prices and yields have an inverse relationship, so when yields fall, bond prices (and thus the value of the ETF) rise.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
Market expectations for a June rate hike plummeted, causing stocks to flip to losses, with the SPDR S&P 500 ETF Trust (SPY) down 0.3%.
The drop in market expectations for a June rate hike led to uncertainty and a negative sentiment in the stock market, causing stocks to flip to losses. This directly impacted the SPDR S&P 500 ETF Trust (SPY), which tracks the performance of the S&P 500 Index, causing it to decline by 0.3%.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80