Powell Ignites Yields
Fed chairman Jerome Powell lit a fire under US yields yesterday with comments made at the National Associations of Business Economics. Powell warned that the Fed is willing to do everything necessary to control inflation and stop it from running riot this year. Powell said that amongst its arsenal, the central bank would use bigger-than-normal rate hikes, if warranted as well as hiking at a faster pace than projected. The Fed chairman noted the strength in the labour market and the need to quickly get monetary back to a neutral level, and even a restrictive level if necessary.
On the back of last week’s hawkish FOMC meeting, Powell’s comments clearly underscore the Fed’s intentions. The market is now swiftly moving to reprice the coming FOMC meetings with pricing for a .50% hike in May surging in response to these comments.
Technical Views
US10Y
The rally in the 10Y has seen price breaking above the recent bull channel and above the 2.149% level. The market is now testing resistance at the 2.337% level and, with both MACD and RSI bullish, the focus is on a continuation higher and a test of the 2.552% level next, with the long term bearish trend line in that region also.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.