Category: Economic Data

Federal Reserve Chair Jerome Powell, in his second day of congressional testimony, told the Senate Banking Committee that the economy was in a sensitive phase.

“In this very sensitive time at the moment, it’s important for us to be careful in the way we conduct policy simply because things are so uncertain and we don’t want to add to that uncertainty,” he told Senate lawmakers on Thursday.

Federal Reserve Chairman Jerome Powell said the upward pressure on inflation was expected to continue for “at least awhile” and flagged the risk that the Ukraine crisis will prolong supply chain problems, which have been a key driver of inflation.

“It is not going to help at all with supply chains, because ships are not being offloaded,”

Fed Chair Jerome Powell noted that the surge in energy prices will likely spill into inflation, and if that shift proved to be lasting, it could put upward pressure at the “margin” to longer-term expectations.

Markets continue to be unsettled as investors pore over developments between Russia and Ukraine and wrestle with the economic outlook against the backdrop of higher rates and perkier inflation.

“Volatility is going to continue to be around and an issue,”

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We should expect volatility to amp up Monday and is already heading for its biggest two-month surge in a year, according to a gauge of cross-asset expectations for price swings in Treasuries, U.S. stocks and global currencies. Treasuries are leading the way.

But this potentially is another Lehman moment, as the U.S. and its European allies stepped up their response to the escalating conflict as Vladimir Putin ordered Russia’s military advance to proceed, announcing plans to sanction the central bank in Moscow and cut off various Russian lenders from the critical SWIFT financial messaging system. That comes on top of earlier moves against the country’s biggest banks and restrictions on the nation’s bonds. Russia’s currency has fallen to a record low amid the current crisis.

As a result, it is likely that all thoughts of QT and inflation control will be swamped by the potential need for liquidity and Central Banks will do what they keep doing.

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