Watch Live: Fed Chair Powell Walk-Back 'Bullard Bomb' With Uber Dovish 'Spin'
Fed chair Jerome Powell will speak to the Congressional Select Subcommittee on the Coronavirus Crisis today and after a rollercoaster ride across all asset-classes in the last few days (post-FOMC), we suspect traders will be hanging in his every word even more than ever.
As the Subcommittee explains, "The hearing will assess the Fed’s emergency lending programs established in the early months of the coronavirus crisis, examine current Fed policies as our economy continues to recover, and consider actions needed to ensure a strong, sustainable, and equitable economic future."
From his prepared remarks, it appears Powell will double-down on the uber-dovish narrative - offsetting the 'Bullard bomb' from Friday...
Powell on labor, joblessness and racial tiering: conditions in the labor market have continued to improve, although the pace has been uneven. The unemployment rate remained elevated in May at 5.8 percent, and this figure understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates that have prevailed for most of the past year. Job gains should pick up in coming months as vaccinations rise, easing some of the pandemic-related factors currently weighing them down. The economic downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the hardest hit. In particular, despite progress, joblessness continues to fall disproportionately on lower-wage workers in the service sector and on African Americans and Hispanics.
Powell on prices and why they are transitory: Inflation has increased notably in recent months. This reflects, in part, the very low readings from early in the pandemic falling out of the calculation; the pass-through of past increases in oil prices to consumer energy prices; the rebound in spending as the economy continues to reopen; and the exacerbating factor of supply bottlenecks, which have limited how quickly production in some sectors can respond in the near term. As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal.
On downside risks: However, the pace of vaccinations has slowed and new strains of the virus remain a risk. Continued progress on vaccinations will support a return to more normal economic conditions.
The market remains of the belief that the first rate-hike will occur before the end of 2022, (but, Powell, Clarida and Brainard are likely among the 0% dots until 2024... so forget any rate hikes).
https://www.zerohedge.com/economics/watch-live-fed-chair-powell-walk-back-bullard-bomb-uber-dovish-spin