Fed Chair Powell Urges Caution, Stock Futures Roll Back Progress

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Key Takeaways

• Fed Chair Powell to address Omicron worries and inflation pressures before Senate today
• US stock futures roll back Monday progress as Dow futures slide more than 1% in pre-market

What’s on Focus in the Markets?

Federal Reserve Chairman Jerome Powell is set to tell US Senate the Omicron virus could cast a shadow over the US economy. More precisely, in his hearing before US lawmakers today, Mr. Powell will address looming uncertainties. Among them, the threat posed by the new coronavirus strain, inflation pressures, and labor-market jitters.

“The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment,” Mr. Powell will say today, according to his prepared remarks. “Economic activity and increased uncertainty for inflation,” are also among the worries the US central bank has to deal with.

“Greater concerns about the virus could reduce people’s willingness to work in person. This would slow progress in the labor market and intensify supply-chain disruptions.”

The Fed chief will be joined by Treasury Secretary Janet Yellen on Tuesday. They will testify before the US Senate Banking Committee. According to Congress requirements, both posts must report each calendar quarter since the introduction of the pandemic stimulus in March 2020.

What’s New Around the Markets?

Ahead of the speeches, however, US stocks dropped in pre-market trading activity. In more detail, futures on the Dow Jones, the S&P500, and the Nasdaq declined between 0.4% and 1.2%. The catalyst – Moderna CEO Stephane Bancel said the Omicron variant will most likely evade existing vaccines.

To this end, drugmakers may need to come up with new shots specifically designed to fight this particular virus strain.

“There is no way the current shots will provide the same level of protection against Omicron as they do against Delta,” Mr. Bancel said.

Moreover, he predicted that the virus is already present in a growing number of countries. Additionally, a vaccine for Omicron, the Moderna CEO said, could be ready in early 2022.

What’s Happening in Cryptocurrency?

The cryptocurrency market early on Tuesday turned more defensive after a slight uptick in prices on Monday. Bitcoin, the world’s biggest digital asset, climbed to a session high of $59,100 late on Monday. However, the upside swing quickly lost steam and the leading crypto is currently floating near $57,000 per coin.

Further, the fast-developing crypto space this month peaked at an all-time high valuation above $3 trillion. On this note, the price of bitcoin hit a record high of $69,000 on Nov. 10.

Still, the orange coin is now trading 18% lower from its record. For the month, on the final trading day of November, the token has declined 7% from its November opening price. In other words, bitcoin is on track to notch a losing month after gaining 50% in September.

What’s Next for Traders and Investors?

Today’s hearing from the Fed Chair and the Treasury Secretary is poised to bring increased volatility in financial markets. In addition, euro zone inflation data will reveal how consumer prices changed in the bloc in November.

Today’s Economic Calendar (EST times)

• 05:00 am, EUR, CPI (YoY) (Nov)
• 08:30 am, CAD, GDP (MoM) (Sep)
• 10:00 am, USD, Fed Chair Powell Testifies
• 07:30 pm, AUD, GDP (QoQ) (Q3)