Federal Reserve Chairman Jerome Powell testified on Capitol Hill on Tuesday and Wednesday of this week, where he acknowledged that the U.S. labor market had returned to pre-pandemic conditions and that, as it cools, it is becoming a more important part of the Fed's equation. Investors will be watching employment generation data closely for signs of weakness, which could accelerate the Fed's rate cuts. In addition, Powell stated that more positive data, received Thursday morning, would give Fed officials greater confidence that inflation is headed toward its 2% target. On the other hand, he highlighted that commercial real estate lending is likely to remain a risk for years to come. However, he noted that recent stress tests showed that large banks are well positioned to withstand a deep crisis.
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