Update on Financial Markets

The first market event of the week is underway as Fed Chairman Powell delivered prepared remarks to the Senate Banking Committee; he’s now moved on to the Q&A part of his day-one session on Capitol Hill.   Overall, Powell’s comments were hawkish as he stated the Fed is “prepared to increase the pace of hikes if needed” and “the ultimate rate peak is likely higher than expected”.  “Although inflation has been moderated in recent months, the process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy”, he added.   Powell’s comments mirror those of recent Fed speakers, so they don’t come as much of a surprise.  While rates on the shorter end of the curve (those which track Fed funds more closely) are up post-speech, the longer end of the curve is hanging tough.  Earlier, we saw the 10yr yield pop above 4%, before settling back around 3.96%.  Mortgages are steady as well, currently trading down 3/32nds on the day.   Stocks are a little rattled on Powell’s hawkish rhetoric; the DOW is currently down 275 points.  Tomorrow the hearing continues and Friday we get the February employment report, which is being billed as the most important one in years