Fed Chair Jerome Powell’s post meeting press conference was generally taken well by investors. Both DOW and S&P 500 closed at new record highs, albeit slight higher ones. 10-year yield pared back some gains to close up 0.020 at 1.641. Dollar, on the other hand, weakened broadly on risk-on sentiments.
Powell said that “the stance of monetary policy we have today, we think is appropriate”. “We think our asset purchases in their current form — which is to say across the curve, $80 billion in Treasuries, $40 billion in mortgage-backed securities, on net — we think that’s the right place for our asset purchase”.
“Substantial progress” is needed before policymakers consider dialing back the asset purchases. “Until we give a signal, you can assume we’re not there yet,” he emphasized. “As we approach it, well in advance, well in advance, we will give a signal that yes, we’re on a path to possibly achieve that, to consider tapering.”
On the topic of of rising treasury yields, Powell said “if you look at various indexes of financial conditions, what you’ll see is they generally do show financial conditions overall to be highly accommodative”. He just reiterated that “I would be concerned by disorderly conditions in markets or by persistent tightening of financial conditions that threaten the achievement of our goals.”