Risk appetite has dwindled late today and the S&P 500 is now barely holding onto gains. Part of the reason why is that Fed Chair Jerome Powell is speaking on Tuesday and the last time we heard from him, he sank risk assets with a hawkish post-Fed press conference.
Powell speaks at 9 am ET in Sweden that's titled "central bank independence and the mandate -- evolving views". The title doesn't ensure he will even touch on monetary policy but I'd say it's a good bet that he does. Powell rarely avoids questions and is generally comfortable offering signals to the market.
If that's the case, the market is right to be worried. The terminal rtae priced in markets is currently 4.93% compared to the 5-5.25% level in the Fed dots. Another topic will be how long rates are held high and he's likely to reiterate that cuts won't come quickly.
So the question will be how well the market can weather hawkish talk. I think it shouldn't come as a surprise and we could see some dip buying but it's a litmus test.
