The Fed’s pivot

Back in 2013, Richard Fischer of the Dallas Federal Reserve warned of “feral hogs” in the bond market. The implication was that the Federal Reserve (Fed) shouldn’t worry about the squeals and protestations of investors and should just get on with the job of delivering against its inflation and unemployment mandates.

I would never dream of talking about my fixed-income colleagues in those terms – certainly not when any of them are in earshot! But there’s definitely been a change of tone at the Fed under Jerome Powell. US central bankers now see delivering ultra-loose financial conditions as key to underpinning confidence in the post-COVID economy.

Despite the rebound in the equity market and feral hogs driving credit spreads tighter, there’s about as much chance of seeing some flying pigs over Washington as the Fed raising rates in the next two or three years.

In the video below, I discuss the implications of that pivot with CNBC.