US: All eyes on Powell's confirmation hearing - BBH
Analysts at BBH point out that in the US, Powell's confirmation hearing starts and his prepared statement underscored the continuity that his candidacy represents.
“He endorsed the gradual increase of interest rates and the shrinking of Fed's balance sheet. While he is open to refining the post-crisis regulation, he endorsed the capital and liquidity provisions, stress tests, and living wills. Powell also defended the institutional structure and broad thrust of the Federal Reserve.”
“The US Senate Finance Committee may steal whatever thunder there may be in Powell's confirmation hearing. The tax bill must be formally voted to by committee (12 Republicans and 11 Democrats) to set the expected floor vote late this week. However, two Republican Senators are balking. Johnson from Wisconsin wants a greater pass-through tax break. Corker, retiring from Tennessee, wants to include a tax increase that would be triggered if subsequent growth is insufficient to cover the $1.4 trillion in revenue over the next decade. Reports suggest that at least two other Senators who are not on the committee favor Corker's amendment, which could jeopardize the bill even if it gets out of committee.”
“The market seems nonplussed. The US 10-year yield is steady to slightly firmer, but with the pullback in Asian and European yields, the spreads have edged more into the dollar's favor. After last week's poor close, the dollar saw follow-through buying in Asia and Europe yesterday. However, North American participants were less enthusiastic but the greenback finished well. A bit more short-covering is seeing the dollar enjoy a firmer tone across the board.”
“The US reports merchandise trade, inventories, house prices and Conference Board's measure of consumer confidence. The data are unlikely to alter general perceptions that the US economy is continuing to experience above-trend growth. The Atlanta Fed's GDP tracker suggests the economy is expanding at an annualized pace of more than 3% for the third consecutive quarter, after the disappointing Q1 performance (1.2%).”