On the one hand, Jerome Powell risks sounding too dovish by pushing back against 75-basis-point rate hike expectations. On the other hand, he could sound too hawkish if he says something like “all options are on the table.”
How would you play two chess grandmasters, simultaneously? It isn’t that hard, even for someone whose opening game never developed beyond 1.e4. You let one grandmaster go first, use her move against the second grandmaster, see his reply, then use his move against the first grandmaster, and so on.
Besides, even after a dismal April in both the stock and bond market, financial conditions haven’t tightened very much. The Chicago Fed’s index of financial conditions, for instance, hasn’t even climbed above zero yet. “As you know, policy works through financial conditions,” Powell told Bloomberg’s Rich Miller at the March press conference. “We need our policy to transmit to the real economy.
On the one hand, Powell risks sounding too dovish by pushing back against 75-basis-point expectations, and on the other, he could sound too hawkish if he says something like “all options are on the table.” Duy said the inverted yield curve story could come back into play if the market became convinced of a 75-point rise in June.
Advanced Micro Devices AMD, +1.44% rallied 7% after the microchip maker forecast annual revenue well above estimates. Airbnb ABNB, -5.09% also gained ground as the lodging booking company beat earnings expectations.Elon Musk mused that businesses and governments may have to pay to use Twitter TWTR, -0.55%, as The Wall Street Journal reported that Musk may take Twitter public again in just a few years.
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