- Fed's Powell: If we need to hike beyond 25 bps, we will
- Powell Q&A: The current labor market is much tighter and hotter than pre-pandemic
- Fed's Bostic says expects six rate hikes this year, two more next year
- Fed's Bostic: Sees inflation at 4.1% by year-end with GDP growth at 2.8%
- More from Bostic: We need to get back to neutral as quickly as possible
- Zelensky: Any compromises with Russia will need to be put to a referendum
- ECB's Nagel: Risk of tightening policy too late has increased
- Support for a EU ban on the purchase of Russian oil is growing - report
Markets:
- WTI crude oil up $7.46 to $110.55
- S&P 500 down 2 points to 4437
- US 10-year yields up 15 bps to 2.30% (new cycle highs across the curve)
- Gold up $16 to $1936
- CHF leads, JPY lags
Inflation has the Fed and the bond market worried. Yields jumped today after Powell put a 50 bps hike squarely on the table going forward. The implied odds of 50 bps on May 4 now stand at 65%, up from 52% at the start of the day.
"If we conclude that it is appropriate to move more aggressively by raising the federal-funds rate by more at a meeting or meetings, we will do so," Powell said.
He was also asked if there was anything that could prevent them from hiking 50 bps and he said "nothing."
The FX moves were noticible with the dollar rallying steadily after the comments but nowhere near to the extent of bonds, where yields hit new cycle highs and ran.
Another interesting move was in cable, which was soft early in Europe then steadily bid to 1.3210 in New York but couldn't break last week's high of 1.3211 into the London fix and then Powell sent it back to 1.3160, about 15 pips lower on the day.
The loonie tried to take advantage of the oil move and hit a 7-week high but could press the issue as the dollar bid lifted USD/CAD. Still, it was a fifth day of gains for CAD and it was the second-best performer after the surprising CHF rally.
