Treasury Yields Rise, Stocks Waver as Powell Reiterates Cautious Fed Policy

Key Points:

* Treasury yields increased, with longer-term maturities climbing more than shorter ones.
* Equities fluctuated, with weakness in tech stocks weighing on trading.
* Federal Reserve Chair Jerome Powell emphasized that the central bank is in no rush to lower interest rates.
* Powell cited a strong labor market and the need to monitor tariffs and inflation data before adjusting policy.
* Wall Street analysts anticipate limited market volatility around this week's inflation reading, with the Fed likely to defer further rate cuts until more economic data is available.

Market Reactions:

* S&P 500 remained relatively flat.
* Nasdaq 100 declined slightly by 0.3%.
* Dow Jones Industrial Average exhibited minimal movement.
* 10-year Treasury yield rose four basis points to 4.54%.
* Bloomberg Dollar Spot Index depreciated by 0.2%.

Fed Chair Powell's Testimony:

* Powell emphasized the Fed's deliberate approach to adjusting interest rates due to a less restrictive monetary stance and a resilient economy.
* He acknowledged the balanced labor market and discounted concerns of significant inflationary pressures.
* Powell clarified that the Fed is not involved in decisions related to government payments.

Analysts' Perspectives:

* David Russell (TradeStation): Powell will prioritize reviewing jobs and inflation data before signaling any policy changes.
* Peter Boockvar (The Boock Report): Powell reiterates the Fed's previous stance of maintaining interest rates.
* Bradley Saunders (Capital Economics): The Fed is unlikely to lower interest rates further in 2023 due to elevated inflation and potential tariff impacts.

Economic Data and Corporate Highlights:

* January CPI data is expected to show a modest increase in core inflation.
* Boeing delivered more jets than Airbus for the first time in almost two years.
* Coca-Cola reported higher profits driven by price increases.
* Shopify exceeded expectations for e-commerce software revenue.
* DuPont's earnings grew amid strong electronics demand.
* Marriott's net rooms growth outlook fell below analysts' expectations.
* Elliott Investment Management acquired a significant stake in Phillips 66 and plans to explore asset sales.

Key Events:

* US CPI (Wednesday)
* Fed Chair Powell testifies before the House Financial Services Committee (Wednesday)
* Eurozone industrial production (Thursday)
* US initial jobless claims and PPI (Thursday)
* Eurozone GDP (Friday)
* US retail sales and business inventories (Friday)