Implications of the Fed Meeting and Powell's Commentary

Powell's recent dovish commentary following the Fed meeting hinted at no further hikes, leading to a significant repricing in the rates market from seven cuts to merely one anticipated cut this year. This stance introduced a more challenging path for yield increases but left room for potential reductions based on future data. Powell's avoidance of clarifying long-term policy rate shifts added uncertainty, especially regarding inflation dynamics and structural changes. The upcoming summary of economic projections in June will play a crucial role in shedding light on the Fed's outlook, impacting both short and long end yield trajectories.