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REUTERS/Brendan McDermid/File Photo Acquire Licensing RightsNov 10 (Reuters) - A hawkish lean from Federal Reserve Chair Jerome Powell chilled a recent rebound in stocks and bonds, with some investors suggesting the central bank was pushing back against loosening financial conditions. Some investors said Powell may have been leaning against a recent loosening of financial conditions that has come as yields have tumbled in recent weeks. Evidence of the dynamic between yields and financial conditions - factors that reflect the availability of funding in an economy - was on display in last week's 0.5% decline in the Goldman Sachs Financial Conditions Index, its sixth-biggest weekly drop since 1990. "If their concept is to have tighter financial conditions, they can’t really let those yields go down. "The rally of the markets both in equity and fixed income unwound the financial conditions tightening to a large degree," Desai said.
Persons: Jerome Powell, Brendan McDermid, Powell, Charlie Ripley, Powell …, Spencer Hakimian, Sonal Desai, Franklin, Desai, Vassili Serebriakov, Jeffrey Roach, Davide Barbuscia, David Randall, Saqib Iqbal Ahmed, Karen Brettell, Ira Iosebashvili, Sam Holmes Organizations: Economic, of New, REUTERS, International Monetary Fund, Treasury, Allianz Investment Management, Goldman, Tolou Capital Management, UBS, Investors, LPL Financial, Thomson Locations: of New York, New York City, U.S, New York
CNBC's Jim Cramer on Thursday said Federal Reserve Chair Jerome Powell's inflation remarks the day before confirmed that inventors shouldn't exit the market over recession fears. To me, that's a green light to stay in stocks." Nevertheless, reading the "Fed tea leaves" will continue to be critical for determining which areas of the economy will be crushed by the central bank's tightening and which will remain intact, according to Cramer. He called on Powell to crush speculative stocks that became inflated during the height of the pandemic and to discourage investing in crypto. "It is touch and go until we get some indication as to whether he'll be willing to declare victory after he crushes speculation, hoarding, profiteering and inefficiency without ruining the rest of the economy," Cramer said.
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