Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

After historic bull run, Wall St eyes four more years of Powell at Fed

EconomyNov 22, 2021 12:52PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: A screen displays the Federal Reserve Chair Jerome Powell on the trading floor at New York Stock Exchange (NYSE) in New York City, New York, U.S., July 28, 2021. REUTERS/Andrew Kelly/File Photo 2/2

By Noel Randewich

(Reuters) - Federal Reserve Chairman Jerome Powell, who presided over a historic run-up in stocks during his tenure, will likely begin his second term amid worries over how rising inflation and looming monetary policy tightening will affect asset prices.

Powell replaced Janet Yellen as Fed Chair in February 2018 and has had to steer the economy through its worst crisis since World War Two, as the COVID-19 pandemic battered U.S. growth last year.

The S&P 500 has risen around 70% under Powell, fueled in-part by extraordinary measures taken during the coronavirus pandemic. The index increased by 59% under Yellen's four-year tenure and rose 39% during Ben Bernanke's eight-year term through January 2014.

Fed heads and the S&P 500:

Among investors' most immediate concerns are whether a recent inflationary surge will prove more sustained than the Fed had expected, pushing the central bank to accelerate the unwinding of its $120 billion-per-month bond buying program and raise rates earlier than anticipated.

The Fed's policymakers are publicly debating whether to withdraw support for the U.S. economy more quickly to deal with inflation, with one official signaling on Friday that the idea will be discussed at the central bank's upcoming meeting.

Inflation expectations in the U.S. bond market have climbed in recent weeks, bolstering the view that the Fed may need to act more aggressively.

The difference between yields on 5-year and 10-year Treasury inflation protected securities and those on typical Treasuries stand near record highs.

Breakeven inflation rates:

The pace at which the Fed unwinds its roughly $8.6 trillion balance sheet and moves on to a series of expected interest rate hikes can also be a key driver of the U.S. dollar. The U.S. currency rose by around 20% between mid-2014 and early 2015, when it became evident that the Fed would be far more aggressive than other central banks in normalizing monetary policy.

Fed heads and the dollar index:

The greenback is up around 7% under Powell, and its gains have accelerated in recent weeks as some investors bet U.S. monetary policy will take a more hawkish course.

With inflation rising at its fastest pace in decades, investors increasingly believe the Fed will need to raise rates faster than suggested in its so-called dot plot, released in September. The Fed's next meeting is December 14-15.

When will Fed raise rates?:

One key metric the Fed is watching as it fine tunes its monetary policy is unemployment. Powell said on Nov. 3 that the economy is not yet at maximum employment, meaning it is not yet time to raise interest rates.

But he added that the labor market could reach full employment by the second half of 2022 if it continues to improve at the same pace seen over the last year.

Fed and unemployment:

Fed's ballooning balance sheet:

After historic bull run, Wall St eyes four more years of Powell at Fed

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email