Comments from Barkin
- There will be price pressure in the spring, given pent-up demand and excess savings
- We will be watching to see what service-sector jobs come back and if they don't, if those people can be redeployed
- I watch carefully survey based and market-based inflation expectations but those are still short of where they should be
- At the longer end of the curve, it depends a lot of the driver. If they driver is elevated inflation expectations then it's something to address
- If the driver of higher rates is "as it seems to be" vaccine and economic optimism then "it's a natural reaction"
- No indication that inflation expectations are moving higher
- I haven't seen evidence of rising yields affecting investment
- My forecast hasn't changed but the uncertainty range has narrowed
This is the first sign that the Fed doesn't care about rising yields. It certainly wasn't an unequivocal statement but if that's the line that Powell takes, I can envision rates running higher.
We might be in a situation where yields continue to creep higher until the Fed does something about it.
We will hear from Bostic, Mester and Kashkari in a bit over an hour. The topic is "racism and the economy" though so it might be a dud.
