Powell’s Comments Unleash Unsettling Volatility

The remarks by Federal Reserve Chair Jerome Powell fueled considerable volatility in markets, causing a yield spike, a stock selloff and an inversion of the 2s-10s yield curve. The Fed is lacking a comprehensive assessment of policy risks in today’s fluid economy.

March 9, 2023 . 4:26 AM

1 min read

Federal Reserve Chair Jerome Powell's remarks fueled considerable volatility in markets that could risk both economic well-being and financial stability.
Comments at the press conference caused significantly more volatility than the prior publication of the central bank’s policy decision and Powell’s written remarks.
Market reactions included a yield spike at the front end of the bond market, with the two-year breaking 5% for the first time since 2007, an across-the-board selloff in stocks, with the S&P 500 Index dropping 1.5% and an intensification of the inversion of the 2s-10s yield curve.
The markets moved the odds in favor of 50 points, which would reverse the downward shift in hikes the central bank prematurely made just a month ago.
The Fed seems to lack a comprehensive assessment of policy risks in today’s inherently fluid domestic and global economy.