Suggested InvestmentHorizon: 6 months – 1 year
Time taken to doublemoney: 0.9 Years
Powell’s testimony occurred against the backdrop of growing optimism about the economy as vaccines against the coronavirus are more widely disseminated and expectations of further fiscal stimulus from President Joe Biden and Congress mount.
Inflation Expectations
Bond yields have risen on the economy’s better prospects and in anticipation of faster inflation. Some traders have also brought forward their expectations for the Fed’s first interest rate increase since it slashed rates effectively to zero last year.
Price action was volatile in the aftermath of Powell’s opening statement text release, with 10-year yields initially rising a couple of basis points to 1.3875% session highs, before the move quickly faded and yields dropped back lower by about the same amount.