Fed's Dovish Stance Amid Geopolitical Conflicts☕
As is the norm in the post-QE era, the developing geopolitical conflicts have given markets an excuse to focus on the possibility of a lower Fed rate trajectory, rather than any negative effects and human toll from a large-scale kinetic conflict. Since the events of the weekend, we have seen a line up of Fed speakers apparently leaning on the dovish scale:
1.Vice Chair Jeff Jefferson mentioning 'cognizant of tightening financial conditions'
2.Dallas Fed Logan stating 'as term premia rises, they could do some of the work of cooling the economy for [the Fed]'
3.Atlanta Fed Bostic stating that rates are 'sufficiently restrictive' and high enough to 'achieve the [Fed's] 2% inflation target.
4.SF Fed Daly stated that "5% is not going to be the new neutral", and a rise in bond yields maybe substitute for a rate hike.
Finally, WSJ's Timiraos (Fed mouthpiece) released an article overnight titled "Higher Bond Yields Likely to Extend Fed Rate Pause", rounding out a pretty dovish chorus from the Fed to start the week.