Markets Look to Powell Amid Rising Tensions in the Middle East

The Middle East crisis has put markets on edge, pushing up oil prices and driving demand for safe havens, like gold. A day after President Biden’s whirlwind trip to Israel, investors are focused again on their chief concern: whether stubbornly elevated inflation will force central banks to keep interest rates higher for even longer.

A key update comes Thursday at noon Eastern, with Jay Powell, the Fed chair, set to speak at the Economic Club of New York. Wall Street will be tuning in for Powell’s outlook on interest rates and for clues about the level that might be needed to nudge inflation closer to the Fed’s target of 2 percent.

In recent months, inflation has begun to ease, but the path has been bumpy as hiring remains robust and consumers continue to spend.

That’s fueled fears in the bond markets that Fed policymakers will keep their prime lending rate at around 5 percent well into next year. The conviction has prompted a mammoth sell-off in Treasuries in recent weeks, pushing the yield on the 10-year T-bill to a 16-year high.