Fed chair Jerome Powell testifies on the economy, interest rates

We've got Fed Chair Powell speaking today and expectations are he may well further water down expectations for FOMC easing

"Economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the USA economy".

"That is very broad across Europe and around Asia, and that continues to weigh", the head of the USA central bank said.

"What happens when it stops cutting (one and one for insurance purposes?) and what happens if the US-China trade sitch [sic] goes awry? It doesn't remove the uncertainty".

Equities that had slumped since Friday's strong jobs report rallied back to intraday records after the Fed chairman signaled a willingness to lower rates, citing a slowing global economy and trade issues.

Testifying to the House Financial Services Committee, Powell was asked, as he has been before, what he would do if President Donald Trump tried to fire or demote him. We have been slightly above and below the 2% level for more than three years.

Following the hearing on Wednesday, the Fed is to release the minutes from its last policy meeting, which should show the extent to which the thinking at the central bank shifted in the days following Trump's Mexico tariff threat, and how the discussion was shaped by other concerns including weak inflation.

In the prepared remarks he delivered Wednesday before taking questions from the House members, Powell made no mention of the president's criticism.

"You would not pack up and you would not leave?" the California Democrat repeated.

"Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the US economy", Powell continued.

In his semiannual Monetary Policy Report to Congress, the Fed chair said global crosscurrents related to growth and trade had reemerged since policymakers met in May, with apparent progress on trade having since turned into greater uncertainty and with the central bank's contacts in business and agriculture reporting heightened concerns over trade developments. That appearance served to cement financial market expectations for benchmark lending rates to be lowered at the conclusion of the Federal Open Market Committee's July 30-31 meeting.

USA stocks were trading higher, with the benchmark S&P 500 index briefly crossing the 3,000-point mark for the first time.

The chairman's remarks led investors to send stock prices up, bond yields down and the value of the USA dollar lower on expectations of lower interest rates.

Government bond yields dipped, with two-year US Treasuries falling below 1.87 percent, from around 1.93 percent.

The healthcare index .SPXHC , which is the worst performing S&P sector this year, was off 0.26%.

Powell was later asked by Carolyn Maloney, Democratic representative from the state of NY, if the Fed considers a half-percentage-point lowering of the benchmark interest rate during the July 30-31 FOMC meeting.

However, inflation has stayed tame over the past year, with consumer prices growth slowing to 1.6 per cent compared to June 2018, two tenths of a point lower than in May.