The Fed is walking on egg shells trying not to say or do anything that would upset the markets and topple the house of cards. From Sven Henrich at northmantrader.com:
What a circus. I imagine there’s a big sign in every Fed building in America: Don’t drop, fragile, handle with care.
Janet Yellen, while no longer in a Fed building, committed the cardinal sin of pointing out the obvious yesterday: Rates may have to be raised in response to rising inflation.
The response sequence was as predictable as laughable:
Recognizing the market’s reaction of the unthinkable: Selling, the comments had to be caveated to immediately erase the damage of a near 3% drop in the tech sector.
Yes, this is how conditioned investors are, this is how pitifully everything is centered around policy makers where the slightest hint or thought of even just thinking about reducing the free money spigot may cause selling of equities.
And it wasn’t just Yellen coming to the rescue of her unforced error course. In the last 24 hours alone a multitude of Fed speakers coming out nearly every hour to assure markets that they either have the tools ideal with inflationary pressures or that inflationary pressures will be transitory or even moving the goalposts outright: