FOMC Voting member Jerome Powell has spooked markets this morning (though a glance at stocks impotence would not tell you that) with his comments that a "September rate hike is now 50-50," and that "The Fed would like to test a rate rise as soon as September." FX markets are turmoiling with the USD surging and bond markets are seeing Bunds/TSYs sold aggressively. Stocks shrugged in their "huh?" way initially but tumbled as Powell confirms 'mechanical'-sounding 1% rise per year in rates if the economy continues to grow as expected.
- *POWELL: TEST TO RAISE RATES COULD BE SATISFIED AS SOON AS SEPT.
- *POWELL SAYS HIS FORECAST CALLS FOR RATE RISES IN SEPT., DEC.
- *POWELL SAYS ODDS FOR SEPT. RATE RISE IN 50-50 RANGE
- *POWELL: PATH OF RATES GOING FORWARD MORE IMPORTANT THAN LIFTOFF
- *POWELL EXPECTS PACE OF TIGHTENING ROUGHLY IN LINE WITH DOT PLOT
- *POWELL: FED AND MARKETS ARE GETTING INTO CLOSER ALIGNMENT
- *POWELL: DOLLAR IS STRONG BECAUSE U.S. ECONOMY IS STRONG
- *POWELL: THERE'S RISK UNEMPLOYMENT MAY FALL FASTER THAN FORECAST
And there's no risk...
- *POWELL SAYS SOME MARKET RISK HAS SHIFTED TO ASSET MANAGERS
- *POWELL: NOT CONCERNED HIGHER VOLATILITY WILL HARM ECONOMY
- *POWELL SAYS HE DOESN'T SEE A BUILD-UP OF AN ASSET BUBBLE
- *POWELL SAYS HE'S NOT PARTICULARLY TROUBLED BY EQUITY VALUATIONS
So Powell is disagreeing with Yellen on bubble-iciousness and appears more hawkish on rates that the market "read" into Yellen's remarks.