I’m not sure that it rises to the level of a “taper tantrum” but the financial markets wanted Fed chair Jerome Powell to signal that the central bank would increase its bond buying at the 10-year end of the yield curve in order to depress rising Treasury yields.
And it got nothing of the sort from Powell speaking at a Wall Street Journal event today. Powell trotted out the same old assurances–the Fed wouldn’t raise rates even if inflation spikes in the short term. And the Fed would continue its program of buying $120 billion in bonds and mortgage-backed assets a month.
But the same old assurances weren’t enough today.
The yield on the 10-year Treasury jumped to 1.55% from 1.42% yesterday and took the stock market down along with bond prices.
For the day the Standard & Poor’s 500 closed down 1.34% and the Dow Jones Industrial Average fell 1.11%. The NASDAQ Composite was lower by 2.11% and the NASDAQ 100 dropped 1.73%. The small cap Russell 2000 closed off 2.33%. The iShares MSCI Emerging Markets ETF (EEM) lost 2.16%.
The portents for tomorrow were mixed but certainly not positive. The major indexes didn’t collapse at the end of the session, as frequently happens when selling is accelerating, but both the S&P 500 and the Dow Industrial Average were lower at the close (at a loss of 1.34% and 1.11%, respectively) than they were at 3 p.m. New York time (down 1.10% and 0.97%, respectively.)
