Powell says the Fed is ‘not far’ from the confidence required to cut rates – US Market Wrap

Stocks rose to all-time highs ahead of the US jobs report, with investors betting that some of the world’s major central banks will begin cutting interest rates as early as June.

These bets emboldened equity bulls, who believe lower borrowing costs will boost corporate profits. While technology remained the dominant force, an equal-weighted version of the S&P 500, with companies like Nvidia carrying the same weight as Dollar Tree hovered near a record. That gauge is less sensitive to gains from the largest companies, giving some hope that the rally will broaden.

Treasury two-year yields fell alongside the dollar after Federal Reserve Chairman Jerome Powell stated that the Fed is “not far” from feeling confident enough to ease policy. He stated that rate cuts “can and will begin” this year, while policymakers are well aware of the risks of cutting too late. The Fed chief also stated that he could see a case for shortening the maturity of central bank holdings.

Across the Atlantic, European Central Bank President Christine Lagarde suggested that officials may be able to ease policy in June. The ECB, like the Fed and the Bank of England, is debating when to declare inflation under control and begin undoing the unprecedented monetary tightening used to combat it.