Stocks were not thrilled with Powell’s somewhat hawkish testimony yesterday. Bottom line, he didn’t do much to inspire confidence that tightening would be limited to three rate hikes.
The killer line came, however, when he admitted that the US is not on a sustainable fiscal path. It was, perhaps, the least surprising comment he might ever utter during his tenure. But, the algos were not amused that he said it out loud.
This sent note yields spiking higher…
…which sent stock prices tumbling lower. Fortunately for the bulls, SPX’s slide landed it right at important support. It will be very easy to measure whether or not the bounce has run its course for now.
Keep an eye on TNX and VIX today, as they should both provide clear signals.
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