Powell has been the focus of the market these two days. Following last night's Senate hearing, he will testify again in the House of Representatives tonight. But in addition to this, the market may have missed something.
Let's review Powell first. He didn't make any new statements last night. He still emphasized that the Fed is paying attention to CPI and employment. Last week, a weak non-farm report was released, and there will be CPI tomorrow. These are basically known to the market, so Powell did not reveal any new information.
In addition to focusing on what Powell said or didn't say, we can't ignore the overnight French market dynamics. The aftermath of the French election is not over yet. The left-wing coalition may split because it is composed of many small parties, some of which may join the centrists, which means that after all these farces, Macron's centrists may have a majority again, so France is full of uncertainty now. This has been reflected in the French market yesterday, with French stocks falling about 1.5% and French bonds also falling sharply. We need to pay close attention to developments because we saw a few weeks ago when the first polls came out, the euro was affected by the situation in France, which affected the US dollar, and then affected other commodities such as gold and cryptocurrencies, so this risk event is worth paying attention to.
Of course, apart from the situation in France, the focus this week is the CPI data, which will further shape the market's expectations of interest rate cuts.
