The Fed cleared a lot up for the market yesterday by confirming that inflation still matters, but that systemic banking problems also matter.  Powell pointed to the latter being like a free rate hike--i.e. something that helps deliver a tightening effect to the economy without the Fed actually having to hike rates. Markets took it as a potential turning point for rate hike urgency.  Unfortunately, the existence of that turning point depends on the persistence of banking concerns.  Assessing that persistence not only requires time, but also has no definite, positive, watershed moment. 

By alerting the world to the tightening possibilities from bank issues, the Fed went a long way toward confirming that we can do our watching and waiting from lower rate levels than those seen in early March.  The current range will likely prove to be too low if we don't get additional evidence of bank stress or economic fallout, but for now, it's centered on 3.50% in 10yr yields and on an end-of-year Fed Funds Rate range of 4.0 - 4.25% (expressed as 4.125% in the chart).

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