- Stocks have been tethered over the past week to rising Treasury yields and the possibility that the Fed will tighten monetary policy to tackle an expected rise in inflation.
- On Thursday, Fed Chairman Jerome Powell acknowledged that "some upward pressure on prices" could occur as the economy reopens, noting that he expects the central bank to be "patient" on policy action even if the economy sees "transitory increases in inflation."
A man wearing a face mask walks past the U.S. Federal Reserve in Washington, D.C., the United States, on Dec. 2, 2020.Liu Jie | Xinhua News Agency | Getty Images
The U.S. Federal Reserve won't step in to temper rising inflation any time soon, market watchers have said, despite surging yields that have roiled global stock markets.
Stocks have been tethered over the past week to rising Treasury yields and the possibility that the Fed will tighten monetary policy to tackle an expected rise in inflation.
On Thursday, Fed Chairman Jerome Powell acknowledged that "some upward pressure on prices" could occur as the economy reopens, noting that he expects the central bank to be "patient" on policy action even if the economy sees "transitory increases in inflation."
Though the Fed has consistently vowed to keep its monetary policy accommodative and suggested employment and inflation are still well below target, Powell's comments sent the benchmark U.S. 10-year Treasury yield back above 1.5% and rattled global stock markets. That yield hit an intraday high of 1.626% on Friday after a solid jobs report.
