Fed Chairman to speak in front of Congress

Brian Cheung joins Myles Udland, Brian Sozzi, and Julie Hyman to discuss what can be in store for the markets as they await Fed Chairman Jerome Powell's testimony in front of Congress this afternoon.

Video transcript

JULIE HYMAN: Well, as we have noted, it is a busy week for Fedspeak. And Jay Powell is actually going to be testifying this afternoon on the reaction of the Federal Reserve to the coronavirus pandemic and crisis. His comments, in terms of his prepared testimony, has already been released. And our Brian Cheung is back with us, as promised, to walk us through some of the highlights here. Brian.

BRIAN CHEUNG: Well, Julie, as you mentioned, the Federal Reserve releasing the prepared testimony for Fed Chairman Jay Powell, who will be testifying this afternoon at 2:00 PM in front of the Select Subcommittee on the Coronavirus Crisis. So it's neither the House Financial Services Committee nor the Senate Banking Committee. But his remarks very similar to what we already saw in the Fed policy statement last Wednesday. He said that inflation has increased notably in recent months, and he committed the Fed to doing everything that it can to support the economy for as long as it takes to complete the recovery.

But of course, it wasn't Powell that was getting a lot of attention in previous weeks. It was the flurry of Fed speakers that we talked about yesterday. At least 10 Fed officials scheduled to speak this week. Powell is just one of those 10.

And as we know, with the distribution of those dot plots that map out each policy maker's projections for where interest rates could go over the next few years, that could present some volatility, especially as we've been watching the bond markets moving quite a lot, especially after that CNBC interview with St. Louis Fed President James Bullard last week, where he said that his first interest rate hike could come as soon as late 2022. But we got a little bit more clarity from that Fed official-- again St. Louis Fed President James Bullard-- on bond market movements since the Federal Reserve's dot plot projection last week, trying to underplay exactly how that went. Take a listen.

JAMES BULLARD: I think the markets themselves are a little bit confused about the recent moves. I do think we're going to allow inflation to be above target, as I've been stressing here. So, that has to get priced in.

But in addition, you've still got very low rates in Europe and Japan. I just don't see how US rates can go too much higher than where they are in Europe and Japan.

BRIAN CHEUNG: Likes of Dallas Fed President Robert Kaplan yesterday similarly saying that there are global pressures that are keeping longer-term interest rates low, which might explain why the 10-year yield hasn't necessarily tilted as high as that 200 basis-point level that some people were speculating a few months ago. Now, of course, a number of other Fed officials on for later this week. We've got San Francisco Fed President and FOMC-voter Mary Daly later this morning, in addition to the likes of Eric Rosengren from the Boston Fed tomorrow. And of course, we'll have all those updates right here on Yahoo Finance.

JULIE HYMAN: Look forward to them. Thanks so much, Brian. Appreciate it. I'm sure we will talk to you again tomorrow about the aftermath of what he says this afternoon.