How Did Powell Bring The Pain With As-Expected Remarks?
How Did Powell Bring The Pain With As-Expected Remarks?
This morning, we said the bond market appropriately and accurately priced in Powell's Jackson Hole speech ahead of time, but the 3.6% losses in the S&P raise some questions. In other words, stocks don't look like they were as clairvoyant as bonds. One conclusion is that bonds may indeed have been a bit bummed by Powell's bluntness, but then managed to pick up a few buyers as the fled from the stock market seeking safer havens. Fully expected or not, Powell's message was entirely on-brand for all the recent Fed comments in August, including his own comments in the July 27th press conference.
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- PCE Price Index
- -0.1 vs +1.0 prev
- Core PCE
- 0.1 vs +0.3 f'cast, 0.6 prev
- Y/Y Core PCE
- 4.6 vs 4.7 f'cast, 4.8 prev
- PCE Price Index
Modestly weaker overnight and little-changed after decent PCE inflation data. MBS are still down an eighth, and 10yr yields are up 2bps at 3.05 after being as high as 3.086 overnight.
Volatility before and after Powell's speech. Treasuries near unchanged on the day (closer to best levels of the day). MBS have seen huge illiquidity at times. Prices are technically down 3/8ths, but trades are more likely to be executed closer to unchanged levels or a few ticks below.
New Lows of the day for MBS (factoring out late morning illiquidity). 4.5 coupons down 10 ticks (.31) at 99-29 (99.91). 10yr yields doing better, holding near lows and currently unchanged at 3.032.