ASX set to fall as Powell shakes up Wall Street

Friday’s stunningly strong jobs report means Wall Street is raising its forecast for how high the Fed will take rates by the summer, closer to what the Fed has been saying. Investors are also reducing bets that the Fed may cut rates later this year. Rate cuts can goose the economy and act like steroids for markets.

Treasury yields have zoomed higher in recent days on expectations for a firmer Fed. They were holding relatively steady Tuesday

The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, slipped to 3.63 per cent from 3.64 per cent late Monday. The two-year yield, which moves more on expectations for the Fed, dipped to 4.43 per cent from 4.47 per cent. It remains near its highest level in three months.

A relatively lacklustre earnings reporting season on Wall Street is also rolling on.

DuPont climbed 6.5 per cent after reporting stronger profit for the latest quarter than analysts expected. Activision Blizzard gained 5 per cent after the video-game company reported stronger revenue and profit for its latest quarter than expected.

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On the losing end was Carrier Global, which dropped 4.4 per cent despite matching analysts’ expectations for profits in the latest quarter. It also gave a forecast for revenue this upcoming year that was slightly above Wall Street’s expectations. Analysts pointed to a deceleration in orders.

AP, Bloomberg

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