Janet Yellen, Not Jay Powell, Triggered Historic ‘Everything Rally’
What (or who) turned the tide nine weeks ago for markets?
Put differently, what was the proximate cause of the two-month "everything rally" which, when the dust settled, counted among the most pronounced, inclusive asset price surges in recent memory?
There are a lot of candidates, and the most accurate answer is one that takes all of them into account. But it still feels, to me anyway, like Treasury's refunding announcement on November 1 gets short shrift.
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How much additional flexibility does Treasury have to push out and lower coupon issuance?
additionally…pension funds benefited, thereby state budget planning benefitted, and capital gains dependent states, aka blue states benefitted…as far as im concerned Janet Yellen remains Biden’s and Dems best hope for economic and political success in 2024…she was rumored to be leaving after 2022 midterms, I’m sure glad she stuck around…
Been paring back my late fall foray into duration (as H tipped us), thinking the rally gave us a widely expected gift that was unexpected in its speed/pace. Feel like the market is set up to be disappointed on the rate front, at least until the economy drags a little further, or some sort of new geopolitical mess (including climate) arises. On balance, higher for longer is still ringing in my ears louder than the Fed’s more recent remarks about not letting financial conditions get passively tighter should inflation continue to head below target. I haven’t historically been a Fed watcher as much as recently and wondering if others can recall a set up when the market expected so many more rate cuts (six in this case) than the Fed was projecting (three).