Bond markets are signaling a resilient economy and higher expected inflation.
Most of the recent move higher in bond yields reflects a higher expected neutral rate.
Wanted to remove the Fed’s “easing bias.”
Reducing the banking system’s demand for reserves would provide a smoother path toward a smaller Fed balance sheet than shrinking reserve supply. The possibility that we would consider an interest rate increase is greater than zeroFed Chairman wash will be asking profound and deep questions about how Fed operates, and that is refreshing
Overall tone: More hawkish. The comments emphasized resilient growth, rising inflation expectations, and a preference to remove easing bias, all of which lean toward keeping policy restrictive for longer.
This article was written by Greg Michalowski at investinglive.com.