Global stocks rally, El-Arian says US Fed faces communication challenge

Powell’s comments confirmed expectations that the US Federal Reserve would hike interest rates by 50 basis points this month, four weeks away from a 75 basis point hike, while indicating that more increases are necessary to curb inflation. Will be

Wall Street equities closed higher on Wednesday while US Treasury yields edged lower and the dollar sank. Stocks in Asia extended gains after a sharp rally on Wall Street.

Powell cautioned that with inflation still very high, investors have loosened their wallets.

Commenting on that, El-Arian tweeted that the US Federal Reserve Bank is facing a communication challenge indicating that the Fed Chair will have to choose his words.

The more the president tilts his remarks, the looser the fiscal situation and potentially the bigger the risk of missing the inflation objective,” he said.

Significantly, as soon as Federal Reserve Chairman Jerome Powell indicated a softening of rate hikes, Wall Street stocks and the Asian stock market saw a tremendous rally.

According to Bloomberg, futures on the S&P 500 were up 0.3% as of 9:27 a.m. Tokyo time on December 1. S&P 500 futures rose 3.1% and Nasdaq 100 futures rose 0.3%. The Nasdaq 100 climbed 4.6%.

The 10-year US Treasury yield rose one basis point to 3.61%. However, Australia’s 10-year yield declined three basis points to 3.50%.

Japanese shares also gained momentum. Australian shares closed higher for the second session in a row. They were joined by the US and Hong Kong futures in showing a similar trend. Tech stocks soared on positive market sentiment, which lifted them to nearly three-week highs for the S&P 500. Foreign currencies such as Euro, Japanese yen and Yuan also showed correction against the dollar in the market.