CRU: Fed’s Dovish Song Won’t Soothe the Bond Market

By CRU Economist Anissa Chabib and Principal Economist Alex Tuckett

The Fed’s Jerome Powell has continued to strike a dovish tone, emphasizing that the Fed will continue to support the economy until “substantial progress has been made.” However, he stopped short of any attempt to directly push back against recent rises in bond yields. Furthermore, revisions to the Fed’s forecasts and interest rate projections indicate the difficult decisions to come if the economy rebounds as quickly as many now expect. This will not end the volatility in bond markets.