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Futures, Treasuries Jump After Powell Says Economic Recovery Hasn’t Progressed Enough To Begin Tapering

We said Powell would be dovish and he did not disappoint.

Fed Chair Powell’s prepared remarks ahead of his testimony before the House Financial Services Committee today at 12:00pm have been released and they served as rocket fuel to S&P futures which surged to new all time highs after the central bank head said that “monetary policy will continue to deliver powerful support to the economy until the recovery is complete” which apparently won’t be for a long time as the jobs market is still “a ways off” from the “substantial further progress” needed to begin bond-buying taper. Just as importantly, while Powell did concede that inflation is “likely to remain elevated in coming months before moderating” adding that expectations are broadly consistent with the Fed target.

Addressing soaring prices, Powell sticks to the party line that “Inflation is being temporarily boosted by base effects, as the sharp pandemic related price declines from last spring drop out of the 12-month calculation” although as noted yesterday that does not explain why 2022 inflation forecasts are rising. 

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