Fed Chair Jerome Powell’s aggressive remarks
Following a strong selloff on Friday, US equities markets concluded the week down as markets reviewed Powell’s recent remarks at the Jackson Hole Economic Symposium. Powell stated that the Federal Reserve will keep raising interest rates aggressively until inflation is under control. He recognized that growth would slow down, adding it will also cause some pain to both individuals and businesses.
Treasury yields concluded the week at 3.03% driven higher by anticipation of increased borrowing rates as the Fed tightens monetary policy while equities fell more than 3%. Crude oil prices closed the week marginally higher, after indications of a drop in crude stocks in the US despite increased export growth. West Texas Intermediate (WTI) crude finished the week around $93 a barrel.
US NFP in the spotlight
The Bureau of Labor Statistics will release its nonfarm payrolls data for August on Friday. Following a stronger-than-expected rise of 528,000 jobs in July, consensus expectations predict a growth of 285,000 jobs in August.
So far, the job sector has been resilient amid unfavorable economic outlook. Fed officials have cited labor market improvement as evidence that the US economy can sustain tighter policy.
Bitcoin fell below $20,000
Bitcoin plunged below $20,000 after equities fell significantly last Friday as investors ran from risky assets on concerns that the Fed’s attempts to combat inflation could drive the economy into a recession. Risky assets are suffering as Powell’s campaign against inflation remains strong even though it will cause an economic downturn.
This year, bitcoin has fallen more than 50% and is still 70% behind its all-time high price last November 2021.
The overall cryptocurrency market has been trouble by a number of crises, such as the crash of the stable coin terraUSD which triggered a series of events that led to the bankruptcy of Three Arrows Capital and Celsius.