Stocks rally to records amid relief rates will remain low | National
“It strengthens our view that markets will continue to do well this year,” he said. But “when the accommodation is fully removed, how bad of a hangover will it be? Just like a party, the hangover is less bad if you leave earlier.”
Treasury yields were lower, but only after some swings. After sitting at 1.35% shortly before Powell’s speech, the yield on the 10-year Treasury sank as Powell cited past instances where policy makers prematurely raised interest rates on worries about short-term bursts in inflation, saying “such a mistake could be particularly harmful” now.
Yields later recovered a bit of their drops after Powell said “substantial further progress” has been made on its inflation goals, one of the two milestones needed for the Fed to slow its bond purchases. The other, which focuses on employment, has shown progress, but Powell did not say it had been fulfilled.
The yield on the 10-year Treasury was at 1.30% late Friday, down from 1.34% late Thursday.
Of course, Powell also said that the delta variant of the coronavirus is complicating things, though he still expects improvements to continue.
The faster-spreading delta variant has already slowed some economic activity. A report on Friday showed that consumer spending in the country rose 0.3% in July from June, a sharp slowdown from the prior month’s 1.1% jump. That’s a big deal when consumer spending is the driving force of the U.S. economy, and its growth slowed even though income growth for Americans accelerated to 1.1% last month.