![]() ![]() The long-end of the curve surged higher but pared gains, the 30-year Treasury yield settled around 5.05%, roughly 5.5 bps higher on the day. Fed has to let rise in yields play out, watch it.At the margin, yield rise could mean less need to hike.The bond market helped them take rates to restrictive territory that should break the economy and allow for inflation to fall to the Fed’s target. Fed Chair Powell said, “Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy.” The initial market reaction was somewhat dovish as Powell acknowledged that persistent changes in in financial conditions could change the path of monetary policy. The dollar extended declines after the release of Fed Chair Powell’s speech. Financial conditions moves can affect policy if persistent. ![]() FOMC proceeding carefully given risks, hikes so far.Geopolitical tensions are highly elevated and pose key risks.Additional evidence of a strong economy may merit hiking.Until inflation is much lower, the Fed will try to jawbone the market into thinking more hikes are possible.įed Chair Powell Key Quotes from prepared remarks: Powell’s comments support their higher for longer mantra, but fell short of signaling a rate hike was likely in December. Powell’s comments were mostly in-line with other officials and support the belief that policy might not be “too tight” and future rate hikes may be needed. Wall Street went on a mini rollercoaster ride during Fed Chair Powell’s speech. ![]()
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