Daily Market Color

Powell Reiterates Need for More Hikes

Bonds and swap rates mixed after Powell delivers speech. Swap rates and Treasury yields were mixed across a modestly steepening curve today- the 2-year yield decreasing ~1bp to 4.46% while the 10-year yield increased ~3bps to 3.67%. Initially, Powell’s comments in an interview with David Rubenstein sent rates lower, but they quickly rebounded- trading in a 10bp range in the process. Meanwhile, equities climbed on the day, the S&P 500 and NASDAQ gaining 1.29% and 1.90% respectively.

Fed Chair Jerome Powell doubles down on additional rate hikes. Chair Powell spoke in Washington DC today, offering his first public comments since last week’s FOMC meeting. In the interview, Powell doubled down on future rate hikes, citing the strong labor market and continued housing services and core services inflation. Still, he noted that he expects 2023 to continue to be a deflationary year and expects inflation to dip back to ~2% by the end of 2024.        

Day ahead. Fed commentary will be extensive tomorrow, with voters John Williams (hawk), Christopher Waller (hawk), and Michael Barr (dove) set to speak. Mortgage rate and application data will start the day off at 7 AM ET, which will be followed by wholesale inventories figures at 10 AM.

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