Pre-Market Pulse 28th August – Hawkish Fed doesn’t rule out further rate hikes

Overnight – Hawkish Fed doesn’t rule out further rate hikes

Equities finished mixed as Fed Chief, Jerome Powell was hawkish in his Jackson Hole speech Friday, Powell said “restrictive” monetary policy is called for to achieve the Fed’s 2% inflation target. Bringing inflation back to target is expected to “require a period of below trend economic growth as well as some softening and labor market conditions,” the Fed chief added. Treasury yields surged in anticipation of a higher-for-longer rate regime, with the 2-year Treasury yield briefly rising close to the cycle highs of 5.12%. Tech briefly came under pressure from rising Treasury yields, which makes growth sectors like tech with higher valuations less attractive, as Google and Meta cut losses. In the retail sector, Gap  rose more than 7%, shrugging off mixed-quarterly results that included weaker second-quarter revenue and third-quarter guidance after falling a cautious outlook on the consumer.