Flash Update – June 21, 2021

Published on: June 21st, 2021

The Unreliable Boyfriend: a phrase initially coined for Mark Carney at the Bank of England; Jay Powell has joined the club. JP has previous form in flip-flopping (2018/19). This time he has made a song and dance about Average Inflation Targting and Outcome-based policy, only to flip and cave at the first signs of inflation that he was insisting was transitory. Back to data dependency then. What to think, what to do?


  • JA
    Joseph A.
    21 June 2021 @ 21:40
    I am struggling to see hawkishness overall in JP's press conference last week. The majority of his rhetoric was still very much his status quo. I think the risk off event last week is more related to monthly options expiry last Friday than any hint of rate rises 2+ YEARS from now (note how things recovered gradually and steadily today) although tomorrow he gives testimony and I think he will reaffirm his original narrative still prevails and markets will resort to business as usual after maybe some brief risk off into his testimony. However if not and he does sound hawkish then I agree rest of the week dicey into quarterly options expiry to month end and dollar strength more probable again. (However on a fundamentals basis USD is biased NEGATIVE/WEAKER this month not stronger) so unless bond yields do something unexpected I think chances are dollar rallies get faded this week intraday. Let's see what transpires....
  • LM
    Lawrence M.
    21 June 2021 @ 22:26
    Thanks for the timely update!
  • JA
    Joseph A.
    22 June 2021 @ 10:37
    Rethinking my earlier comment. Maybe the reaction to the Fed last week (and later today) isn't so much about any perceived change from dovish to hawkish but rather about the implications for debt repayments! Everyone who has debt based on ongoing zero interest rates who perceived the comments last week as more hawkish are having to take their heads out of the sand and face the possibility that rates might rise in 2023 and are forced to consider what effect this will have when the time comes. After all between now and 2023 gives a lot of time for a U turn on tightening / more QE. So my question is, is this really about fears relating to DEBT specifically?