As Fed Chair Powell would say, “markets are working” this morning. In other words: risk assets are up while bond yields aren’t showing much in the way of movement. Investors are doubling down on the November gains this morning after Powell gave the all clear last eve that monetary policy will remain easy for a little while longer. Signaling that he’s in no rush to dial back QE from its current pace of 120 billion USD a month nor change the zero interest rate guidance, in his prepared testimony for Congress Powell called the vaccine news positive “for the medium term” while underscoring the challenges of a vaccination campaign.

 

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