Home Views US Economy

Powell finally has markets right where he wants them

Jonathan Levin
Jonathan Levin6/23/2022 11:32 PM GMT+08  • 3 min read
Powell finally has markets right where he wants them
If markets recover too far, expect Powell and his colleagues to reassert themselves with another round of hawkish rhetoric. Photo: Bloomberg
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

Federal Reserve Chair Jerome Powell believes that monetary policy is carried out through financial conditions, and for the time being, he seems to like where they stand. As he told lawmakers Wednesday, “the market has been reading our reaction function reasonably well.”

That markets and the Fed are on the same page is good news for near-term volatility, but Powell’s words also contain a veiled threat: If financial assets recover too far from the recent selloff, he has ways of putting them back in their place. Investors adjust Powell’s dial at their own peril.

Bond yields have dropped sharply in the past week, and swaps are now implying a lower terminal rate than the median projection of Federal Reserve Board members and Federal Reserve Bank presidents. Meanwhile, the S&P 500 Index rose for the third consecutive day on Wednesday before giving up its gains at the close.

For more insights on corporate trends...
Sign In or Create an account to access our premium content.
Subscription Entitlements:
Less than $9 per month
Unlimited access to latest and premium articles
3 Simultaneous logins across all devices
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.