The Dots have been moved and the turbo-taper is in play… so there’s only one thing left for Fed Chair Jay Powell to do as America heads towards a big pre-Xmas spending week – remind the world (in as dovish manner he can muster) that “tapering (even turbocharged) isn’t tightening.”
The only problem, of course, is that tapering implies tightening to come and the market is pricing that in rapidly.
What is consensus expecting from Powell at the presser? (via Janney)
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Powell to re-emphasize need for “policy flexibility” as the reason before accelerating the taper.
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Powell to push back on need for immediate rate hikes, *emphasizing that the test for hiking is much stricter than the test for tapering.
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Powell to emphasize that while inflation risks have risen, Fed is still waiting to look through economic bottlenecks before making a decision.
The market has fully priced-in the rate-hike expectations…
But more notably, Powell will have to do something since the yield curve has flattened dramatically – signaling a policy mistake is coming…
Watch Powell squirm live (due to start at 1430ET):
