Powell reiterates Fed is waiting, watching, and can be patient, flexible.

Fed Chair Powell reiterated the Fed’s cautious stance at the Economic Club in Washington.  Powell noted that the labor market is very strong, wages are increases, and inflation is near the Fed’s target.  The financial market concern for downside risks are affecting concerns for global growth and trade.  With inflation being low and under control the Fed can be patient on raising rates. He stated the Fed is in a place where it can be patient and flexible.

Powell also mentioned that previous Fed chairs have met with Presidents in the past and that he has yet to receive an invitation to meet President Trump.

Regarding rates, the Fed chair reiterated there is not preset path on rates.  He noted they will always use its tools to sustain expansion.  On the economy, he does not see anything showing elevated recession risk.

On China, Powell is concerned as consumer spending and PMI data has been weaker in China.  He still expects another year of solid growth from China, as authorities are continuing to support their economy.  On trade, if we see the end result delivering lower tariffs, that will be a positive for the global economy.

On the balance sheet, Powell would not specify a target, he reiterated they want to return the balance sheet to a more normal level.

The yield on the 10-year Treasuries remained near the session highs at 2.717%.  The dollar held onto gains its gains and stayed near session highs against both the euro and yen.

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