In a closely watched speech, Powell said that the bond market sell-off of the past few weeks has got his attention and the central bank would not sit back and generally tighten financial market conditions, Powell took no concrete steps, and stocks fell, and long-term government bond yields rose in the wake of his remarks

“I would be concerned about disorderly conditions in the markets or continued tightening of financial conditions that are jeopardizing the achievement of our goals,” Powell said during a webinar in the Wall Street Journal. This was a change from last week in the Powell said he welcomed rising long-term bond yields

Markets are concerned President Joe Biden will receive $ 19 The stimulus plan will overheat the economy and cause inflation

Powell said the Fed would be “patient” with higher inflation, saying it was likely a “one-time” effect rather than price gains that persist year after year

Powell reiterated that the Fed is a “long way” away from its goals of maximum employment and stable inflation of 2%

Shares fell in troubled trading after Powell’s comments on the Dow Jones Industrial Average
DJIA,
-145%
Trade 101 points lower

Returns on 10 Year Treasury Note
TMUBMUSD10Y,
1551%
climbed 73 basis points to 1543%, around the highest level of the year Yields have risen below 1% this year

Earlier this week, Fed Governor Lael Brainard became the first Fed official to speak out about rising bond yields, sparking speculation about Fed measures to cut rates

Powell said the turmoil in the bond markets had caught his attention last week, but said he was not just watching a particular interest rate, he was looking at the financial condition more broadly

The Fed has announced that it will keep policy rates close to zero until the economy has reached its maximum employment and inflation has risen to 2% and is on the right track to moderately exceed this level for some time

“It’s a picture of an economy that has almost completely recovered that will take time,” he said

Markets assess the Fed’s first rate hike in 2023 Fed officials didn’t see an initial hike until December 2024. Officials will update their forecasts and present them at the next Fed Interest Rate Committee meeting on Jan. and 17 March release

The central bank announced that it would continue to purchase $ 80 billion in government bonds and $ 40 billion in mortgage-backed securities every month until “significant further progress” is made in achieving its goals

The Fed buys Treasuries along the yield curve When asked if the Fed “saw something in the financial market” to propose to focus buying on the longer end, an operation known as a “twist” responded Powell: “We believe our current political stance is appropriate”

He said that if conditions change materially, the Fed will be ready to deploy the tools it needs to achieve its goals ”

“The market’s response to Powell, including an increase in long-term yields, is likely to reflect some confusion about how the Fed works. Some people thought Powell would commit to policy today – particularly extending terms in the Fed Portfolio through Operation Twist But come on, the Fed chair would never announce a change in business at a corporate-sponsored event, especially two weeks before an FOMC meeting, ”said Christopher Low, chief economist at FHN Financial

Fed officials will go into a self-imposed power blackout on Saturday and will not take place until after their Nov. until 17 March make public statements

Defense Department leaders have placed unusual restrictions on the National Guard on the day of the Capitol Uprising and delayed the sending of aid for hours, despite urgent police requests for reinforcements

Powell, Jerome Powell

World News – CA – Powell believes current policies are appropriate despite the turbulence in the bond market

Source: https://www.marketwatch.com/story/powell-sends-warning-to-markets-that-fed-doesnt-want-persistent-tightening-in-financial-conditions-11614879804