Federal Reserve Chair Jerome Powell said the run-up in bond yields caught FED’s attention. His commentaries prompted caution and sell off in the market on Thursday, Bloomberg reports.

  • Powell in a webinar said the recent jump was notable and caught his attention. He stressed, however, that the focus is broad on financial conditions and not on bond yields per se.
  • The Fed chair also expressed concerns by conditions in markets or persistent tightening in financial conditions that threaten the achievement of goals.
  • Bond yields were up in recent weeks on expectations of economic recovery and faster inflation post-COVID-19.
  • Powell said the committee is prepared to use arsenal, but declined to elaborate if “Operation Twist” is among the measures considered. 
  • Ten-year Treasury yields extended losses while inflation expectations soared to new highs as Powell spoke. Some traders wanted more specifics on possible moves to tame long-term rates if the Fed desired.
  • Higher yields have unsettled the equities market, particularly tech stocks.
  • Powell reassured that the Fed is far from backing off on economic support even as he is optimistic on the economy.
  • The Fed enters its blackout period ahead of the March 16-17 policy meeting, but Powell said current policy stance remains appropriate.