Brian Chappatta, Columnist

Stocks Matter Most Now, Even for Bond Traders

Jerome Powell changes his tune and says the Fed is listening carefully to the financial markets.

January 4, 2019 at 6:30 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

The central bank boss is all ears.
Photographer: Elijah Nouvelage/Bloomberg

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Federal Reserve Chairman Jerome Powell finally decided that the stock market’s tantrum over the past month was too noisy to ignore.

Traders bemoaned the fact that Powell considered the central bank’s balance-sheet runoff to be on “automatic pilot.” So he softened his tone on Friday during a panel at an American Economic Association meeting in Atlanta, saying policy makers “wouldn’t hesitate to make a change” if necessary. Investors were unhappy that Powell shrugged off swings in the stock market as “a little bit of volatility” that shouldn’t do much harm to the economy. So he assured them that the Fed is listening carefully to the market’s concerns about downside risks. He and his predecessor, Janet Yellen, both reminded listeners about 2016, when the median projection among officials was for four rate increases, yet they only went through with one.