Ann Saphir/Reuters
The comments come after investors fervently dumped Treasurys amid boosted expectations for consumer-price growth.
Businesses in the Richmond area don t seem to be raising prices at an unhealthy rate, Barkin added.
Concerns of rampant consumer-price growth and the resulting sell-off in the Treasury market were natural but missed the bigger picture, Thomas Barkin, president of the Federal Reserve Bank of Richmond, said Monday.
Markets endured a bout of heightened volatility last week as improved growth expectations boosted risk-taking. Investors furiously dumped Treasury bonds and growth stocks for cyclical names in anticipation for new stimulus to drive stronger inflation. The days-long trend sparked questions around whether inflation could soon exceed the Fed s target and, in turn, lead the central bank to raise its benchmark interest rate.
REUTERS/Eduardo Munoz
The US economy is headed for a rebound, but it ll make things more expensive for Americans.
Experts say the economy won t overheat, but more demand for things like homes and gas will mean higher prices.
This is good; inflation like this is a sign of a return to normal and a healthy economic recovery.
Experts are growing increasingly hopeful the US economy will rebound in 2021, but there s a price to pay for that. The price of most things, actually.
A vaccine rollout, a $1.9 trillion stimulus package, and the lift in spending from December s smaller stimulus paint a promising picture of a roaring, reopened America with lively restaurants, indoor dancing, and crowded stadiums. The economy is set for stellar growth as the pandemic subsides, a Bank of America note stated Monday, while boosting its 2021 GDP growth estimate to 6.5% from 6%.
Yuri Gripas/Reuters
Soaring yields signal investors expect the Fed to lift interest rates well before past estimates.
Fed officials will likely need to address the bond-market rout to avoid disruption to the economic recovery.
The Treasury market has made it clear: the Federal Reserve is a downer.
Optimism toward the US economic recovery flourished over the past week. Daily COVID-19 case counts fell further from their January peak. Vaccinations continued across the country, hinting the pandemic could fade in just a few months. Economic data beat expectations. And Democrats pushed forward with President Joe Biden s $1.9 trillion stimulus proposal, aiming to accelerate the rebound even more.