Powell: Higher inflation temporary, no rate hikes in sight

7 min read
fairly easy
Federal Reserve Chair Jerome Powell suggested Thursday that inflation will pick up in the coming months but that it would likely prove temporary and not...

The "tug of war" between investors and the Fed continues, with the Tech sector taking the brunt of the blow. Major indices are in the red again this morning with the Nasdaq (COMP) on pace to post its third-straight losing week for the first time in about six months. Rising Treasury yields remain the elephant in the room. The 10-year yield recently traded at 1.46%, slightly below yesterday's highs but still up more than 50 basis points from the start of the year. Investors seem to be struggling with the 1.45% level. Fed Chairman Jerome Powell has downplayed inflation worries and continues advocating dovish monetary policy, but those yields suggest investors aren't completely convinced. Fed's Powell On Tap Today Powell is scheduled to speak as part of a "discussion" on the U.S. economy at 12:05 p.m. ET today. This is part of a "jobs summit" sponsored by The Wall Street Journal. It seems pretty unlikely he'll say anything new or unique, but when Powell speaks, it's worth monitoring. Especially with so much focus now on the yield picture. Powell has said rising yields are a sign of the economy recovering, which they certainly can be. Sentiment remains tepid. The SPX hasn't been able to hold onto gains for more than a day or two, and failed to re-test its all-time high on the latest leg up. When you keep seeing lower highs, that can tell you something, and it's not a pleasant story. It doesn't help today that European and Asian stocks took a beating. News reports of rising virus cases in Europe are another worry. Initial jobless claims of 745,000 this morning were up just slightly from the week before and basically in line with expectations. It seems unlikely that they'd move the needle too much for stocks, especially with tomorrow's payrolls report ahead and mattering more (see below). Wednesday delivered the second-straight ugly close for the S&P 500 Index (SPX) and the Nasdaq (COMP). It was especially bad for COMP, which fell below psychological support at…
Read full article