Staff of Reuters 3 Minutes to Read Karin Strohecker gives us a preview of the day ahead. PHOTO FROM THE FILE: On December 1, 2020, Federal Reserve Chairman Jerome Powell appears before the Senate Banking Committee in Washington, D.C. Pool/Susan Walsh via REUTERSAfter statistics showed the largest increase in consumer prices in 13 years, we’ll get to hear what Federal Reserve Chairman Jay Powell has to say about it when he begins his two-day hearing on Capitol Hill later on Wednesday. Inflation in the world’s largest economy has stifled the equities surge, just as stocks were making a comeback after surviving last week’s bond market turbulence. Powell will be questioned on how temporary price pressures may be, as well as how quickly the Fed will need to reduce monetary support, which has been essential to markets. Markets pushed the date of the Fed’s first rate rise ahead as a result of Wednesday’s data, pushing the dollar to a three-month high against the euro and a one-week high against the yen. A further complication was the lackluster demand for 30-year Treasury bonds at Wednesday’s auction, which pushed 10-year rates beyond 1.4 percent. Asian equities dipped after a weaker Wall Street close, while European and US markets are expected to open lower. Price pressures are also a hot topic in other countries, with data revealing that inflation in the United Kingdom has risen above the Bank of England’s target, reaching 2.5 percent. Meanwhile, several central banks are pushing through with stimulus reduction plans, with New Zealand announcing a halt to its pandemic-linked QE program. The New Zealand dollar has risen 1% in response to bets expecting a rate hike this year. The Bank of Canada is also anticipated to announce plans to cut asset purchases later in the day. Markets should have more direction on Wednesday as a result of the following key developments: -Inflation in the United Kingdom rose to 2.5 percent in June; the Bank of Canada is poised to ease policy. -The Reserve Bank of New Zealand has stopped buying bonds, paving the path for possible rate hikes. -Meetings of the central banks of Turkey, Chile, and Croatia -India Inflation in the WPI, Swedish CPI, and Euro Area Industrial Production ECB Board Member Isabel Schnabel speaks; Deputy Governor Dave Ramsden of the Bank of England speaks -Auctions: German Bund (10-year) -Profits: Citigroup, Bank of America, BlackRock, Wells Fargo, and Delta Airlines Inflation in the United States (Graph) -Karin Strohecker contributed reporting, and Sujata Rao edited the piece./n
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