Economics
Powell-Backed Yield Curve Gives Fed Leeway to Go Max Hawkish
- Fed chair touts short-term curve as evidence economy is strong
- But elsewhere the bond market is flashing risks to growth
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Jerome Powell had a simple response this week for doomsayers who point to scary Treasury-market moves as evidence that the Federal Reserve will tip the economy into recession through its tightening campaign: You’re looking at it all wrong.
Instead of fixating on ominous bond shifts -- like the five-year rate trading above its 10-year counterpart and a flatter U.S. curve, more generally -- traders on Wall Street should take their cues from another corner of the debt world altogether: the short-term yield curve.