SPY
Stock futures slip again as Powell fails to reassure investors
- Fed Chair Jay Powell vowed to keep monetary policy steady on Thursday
even as the economy improves from the pandemic and inflation begins to
rise. The remarks echoed comments he made on Capitol Hill last month, as
well as a similar stance he's taken during much of the coronavirus
crisis.
A selloff in equities still ensued as benchmark 10-year Treasury yields
jumped another 7 basis points to 1.55%, the highest since mid-February
last
year. Futures overnight: Dow -0.5%; S&P -0.6%; Nasdaq -0.7%.
- *What happened? *While Powell didn't say anything different, markets
focused on what he didn't say, as the backdrop for financial markets has
changed quite drastically since last made a public appearance. Treasury
yields have spiked, along with a broader rise in borrowing costs, and the
big concern is that these moves could be destabilizing. Powell did say
that
if things get disorderly, the Fed has the tools to deal with them, but
investors were likely looking for something that was more specific.
- Others are flagging comments he made about pressure on prices. Even if
the economy sees "transitory increases in inflation... I expect that we
will be patient," Powell added, but that had many investors getting
nervous. "The market's translation of 'patient' is that patient doesn't
mean 'never,' and that Powell is indicating that easy money will at a
certain point come to an end," said Mike Loewengart, managing director of
investment strategy at E-Trade Financial.
- *Go deeper: *On the fiscal side, the Senate is moving forward with
President Biden's stimulus proposal. Investors have been pricing in this
package for some time - and more clearly since Democrats won both Senate
seats in the Georgia Senate runoff elections - which gave the party full
control of government spending powers. The $1.7T price tag for the bill,
along with the trillions in stimulus released in 2020, is really what's
behind a surge in inflation expectations, as well as the backup in
Treasury
yields. How long will the selloff continue without specific measures from
the Fed?
|Today, 4:05 AM|15 Comments
Stock futures slip again as Powell fails to reassure investors
- Fed Chair Jay Powell vowed to keep monetary policy steady on Thursday
even as the economy improves from the pandemic and inflation begins to
rise. The remarks echoed comments he made on Capitol Hill last month, as
well as a similar stance he's taken during much of the coronavirus
crisis.
A selloff in equities still ensued as benchmark 10-year Treasury yields
jumped another 7 basis points to 1.55%, the highest since mid-February
last
year. Futures overnight: Dow -0.5%; S&P -0.6%; Nasdaq -0.7%.
- *What happened? *While Powell didn't say anything different, markets
focused on what he didn't say, as the backdrop for financial markets has
changed quite drastically since last made a public appearance. Treasury
yields have spiked, along with a broader rise in borrowing costs, and the
big concern is that these moves could be destabilizing. Powell did say
that
if things get disorderly, the Fed has the tools to deal with them, but
investors were likely looking for something that was more specific.
- Others are flagging comments he made about pressure on prices. Even if
the economy sees "transitory increases in inflation... I expect that we
will be patient," Powell added, but that had many investors getting
nervous. "The market's translation of 'patient' is that patient doesn't
mean 'never,' and that Powell is indicating that easy money will at a
certain point come to an end," said Mike Loewengart, managing director of
investment strategy at E-Trade Financial.
- *Go deeper: *On the fiscal side, the Senate is moving forward with
President Biden's stimulus proposal. Investors have been pricing in this
package for some time - and more clearly since Democrats won both Senate
seats in the Georgia Senate runoff elections - which gave the party full
control of government spending powers. The $1.7T price tag for the bill,
along with the trillions in stimulus released in 2020, is really what's
behind a surge in inflation expectations, as well as the backup in
Treasury
yields. How long will the selloff continue without specific measures from
the Fed?
|Today, 4:05 AM|15 Comments
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