Pick a little, talk a little
Weekly Cash Commentary
As far as major issues go, last week was more talk than action. A new fiscal stimulus package—which would help to push up U.S. Treasury yields at the front end of the curve—was debated ad nauseum. A measure passed in the House of Representatives on Saturday, but the work by the Senate to create a consolidated bill will take at least this week. It’s a shame that politics have hindered economic relief in the last few quarters. Congress stepped up with emergency aid at the start of the coronavirus-induced economic crisis (a year ago, if you can believe it). But since then, lawmakers in both chambers have needlessly dragged their feet.
Everyone keeps talking about inflation, too, but that doesn’t mean it will happen. While the personal consumption expenditure (PCE) index keeps climbing, it is still about half a percentage point below the Federal Reserve’s 2% target. A bump in prices likely is coming, but don’t expect the Fed to bite and raise rates. Last week, Chair Jerome Powell reiterated the Fed’s commitment to extraordinary accommodative policy when he spoke on Capitol Hill for his semi-annual Humphrey–Hawkins testimony,