In this article, Mr. Grannis highlights the positive pronouncements from the Fed as well as the heartening jobs numbers to stress the strength of the U.S. economy. The market should now respond accordingly.
Two weeks ago Mr. Grannis noted that “the Fed had screwed up badly”. But all was not lost: “all it takes is a few words to put things right. The damage done to date is not significant or permanent, and it is reversible.”
Today we got those words: according to Powell, the Fed is “listening carefully to the markets.” The threat of an overly-tight Fed has now all but vanished. The Fed and the market are dancing together again, with both participants expecting no further Fed tightening moves for the foreseeable future, but with a possibility of an ease later this year (i.e., the market is relieved, but still cautious).
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