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Powell provides a clear signal on a quicker taper pace announced at the upcoming FOMC meeting, and looks increasingly like there was some kind of coordinated messaging prior to Thanksgiving (e.g. Clarida, Daly):

  • Treasury yields are spiking across the curve, led by the short end (2Y yield up 13bp from the low at one point), with the dollar reversing to session highs.
  • Powell: “The economy is very strong, and inflationary pressures are high, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases - which we actually announced at the November meeting - perhaps a few months sooner."
  • Powell's commentary on deciding on accelerating the taper at the December FOMC is similar to what Daly said the other day (i.e. on data points between now and then), though he also noted they'd assess the Omicron variant which of course hadn't factored into pre-Thanksgiving commentary.
  • Powell emphasizes that for now, Omicron is just "a risk"- says on potential impact: About transmissibility, about ability for vaccines to address, about severity. We'll know quite a lot within a month, know some within a week or 10 days; only then will we be able to assess risks for the economy.