- US stocks fell after Federal Reserve Chair Jerome Powell reaffirmed his commitment to containing inflation and recognising the risk of a recession, even though some traders now expect the central bank to closely monitor the impact of its rate hikes on the economy.
- During his testimony in the Senate on Wednesday, Powell made no mention of the size of future hikes, but he did admit that the Fed had failed to do its job and that it would be difficult to engineer a soft landing. Nonetheless, stocks fluctuated during the session as some investors took Powell's comments as a sign that the Fed will consider economic fundamentals and the possibility of a recession as it moves to reduce inflation.
- The chances of the Fed's rate hike cycle extending beyond the November policy meeting, which is the week before the US midterm elections, have shrunk sharply as traders continue to price in the prospect of a hard landing and a faster policy reversal next year.
- As investors remain concerned about a global recession, Bitcoin briefly fell below its $20,000 key level. On Wednesday, Powell stated that the crypto decline has had no significant macro effects thus far. He also suggested that Congress clarify who has the authority to regulate it.
