Fed Chair Jerome Powell Sports A Gray Tie

Yields drop a bit

Fed Chair Jerome Powell this morning said the central bank will not be hiking interest rates this time around and bond yields immediately dropped.

Here’s how it looked on the 60-minute chart for the 10-Year Treasury Note (in basis points):

On the daily chart, however, yields did not fall off by that much when the longer-term is displayed, indicating a firm belief by bond market regulars that Powell doesn’t really mean it.

Here’s the daily chart for the 10-Year Treasury Note:

Note that the yield remains above all of the September levels and well above those of all the previous months on the chart.

Those who pay attention to the details of Powell’s media appearances note that rather than the purple-ish ties he usually wears, this time around the Chair went with a more business-like gray-ish tie. What this might suggest is uncertain although his inflation target of 2% remains distant and that must be a serious concern.

Noted economist Mohammed El-Erian today on Twitter noted that with “a $9 billion increase in the US Treasury quarterly refunding, to $112 billion, and an indication of at least one more increase in auction sizes in Q1 next year, in terms of maturity distribution, the shorter-end continues to carry a significant issuance burden.”

Possible translation: the 10-Year yield will continue upward as prices continue to slide to attract investors.

The benchmark for the Treasuries, the iShares 20+ Year Treasury Bond ETF,  today closed higher on decent volume but remains well below both down trending moving averages:

One more thing: it’s definitely notable that after the U. S.  markets closed this afternoon J. P. Morgan Chief Executive Officer Jamie Dimon said that he suspects the Fed “may not be done” raising rates given “stickier inflation.” 

Is it possible that Dimon noted Jerome Powell’s tie tell?