Jay Powell is in front of the Senate Financial Committee today where he took on bipartisan frustration.  Apparently, nobody got the information they requested from the Federal Reserve and a few Senators are hinting it could influence their confirmation vote.

Nobody seemed happy other than Senator Warren, who got a few gifts before the hearing, inducing policy changes at Bank of America.

Powell when through a checklist of observations:

• Price increases are due to supply constraints and new demand.
• The Fed is considering climate stress tests for the largest banks and claims it’s within the existing mandate.
• There are mismatches between supply and demand, especially in cars (no problem the Biden administration is getting into the car business).
• Tools will be used to get inflation lower, although, stuff like gasoline and food are out of their purview.

Powell thinks the Fed will end asset purchases in March, raise rates over the course of the year, and allow balance sheet to run off later in the year.

This is a less hectic timeline than was shaping up, as consensus on the street was at four + hikes and immediate balance sheet runoffs. That’s the part that put a little spark in the market, especially the NASDAQ Composite, which is holding above that pivotal trend line. The one-day action (bottom orange) is encouraging.

The market will continue to be on pins and needles. Whether Powell rang the bell remains to be seen by the upcoming data, starting with the CPI report tomorrow and PPI on Thursday.