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On Tuesday, Powell took a hawkish stance, stating that recent data shows “there has been no further progress so far this year in inflation falling back to the Fed’s 2% target.” Powell implied that the Fed might keep the current policy rate, which is at a more than twenty-year high, for a longer period, saying that recent data “clearly did not” give the Fed more confidence in reducing inflation and that it might take longer to be more confident.

After Powell’s remarks on inflation, the market’s bets on a Fed rate cut were further weakened. Following his speech, U.S. Treasury prices accelerated their decline, and yields widened. The yield on the rate-sensitive two-year U.S. Treasury note broke through the 5.0% threshold again after last Thursday, reaching a high not seen since November of last year, and the benchmark ten-year U.S. Treasury yield approached the five-month high set earlier on Thursday.

As soon as Powell mentioned the recent data showing a lack of further progress on inflation, swaps linked to the central bank’s meeting schedule pointed to a continued decline in rate cut expectations. The sell-off in the short end of the market pushed the two-year Treasury yield above 5%, reaching the highest level since November of last year. The Fed’s expectations for a rate cut within the year shrank from 43 basis points at Monday’s close to 38 basis points. The expectation for a rate cut in July is about 10 basis points, previously at 13 basis points.

In commodities, the U.S. dollar strengthened, and London copper, which had risen after the UK and U.S. banned trading in Russian metals on Monday, fell back, while London aluminum barely maintained its gains. Geopolitical risks continued to support gold, but the dollar limited the rise in gold prices. At the close, spot gold reported at $2,382.47 an ounce, down 0.02%.

As of the close on the 16th, the price of light crude oil futures for May delivery on the New York Mercantile Exchange fell by 5 cents, closing at $85.36 per barrel, a decrease of 0.06%; the price of London Brent crude oil futures for June delivery fell by 8 cents, closing at $90.02 per barrel, a decrease of 0.09%.