JPow had a very nice chat with the WSJ. He focused on jobs which is his motto, and also what he wants the fiscal side to continue helping.
He set the ground with "deply ingraned low inflation", which means "show me it's not transitory", buying him time for AIT.
1/x
He set the ground with "deply ingraned low inflation", which means "show me it's not transitory", buying him time for AIT.
1/x
He said he saw the rate moves last week (and I imagine he's also sending a message to vol traders that straddle breakeven ranges should be wider when you don't know, not smaller because you think it wont move for a while).
Overall he said what he's supposed to say.
2/x
Overall he said what he's supposed to say.
2/x
The market is allright, rates are developping into a new range because the stimulus is coming and vaccinations are rolling out.
His message can change if and when
a) The stimulus is not to his liking (meaning not jobs supportive)
3/x
His message can change if and when
a) The stimulus is not to his liking (meaning not jobs supportive)
3/x
b) The inflation is moving higher or lower in an odd way and the front end rates are reacting away from it (ie look at the real yields and why they move).
c) Asset prices (bonds and equities) are moving in an erratic fashion
4/x
c) Asset prices (bonds and equities) are moving in an erratic fashion
4/x
But it doesnt mean he'll save the world with YCC or another rate cut or god knows what when SPX drops another 5% in the coming weeks.
The market overall is hot like a potato which has had too little vol and too much return for a bit. It is just shifting regime.
5/5
The market overall is hot like a potato which has had too little vol and too much return for a bit. It is just shifting regime.
5/5
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