Immediately after the election, many on Wall Street were delighted. Stock indexes jumped, with the S&P 500, Dow Industrial Average, and Nasdaq all hit 52-week highs. Yields on the 10-year rose, meaning prices fell, which typically happens with inverse movements between bonds and equities.
And then they started to fall last week.
The trigger wasn’t a typical economic release. Rather, it was speeches from two Federal Reserve officials: Chair Jerome Powell on how rate cuts may not follow the pace many might want and Governor Adriana Kugler, addressing the need for an independent central bank. Between the two, it was the effect that one-time Fed Chair William McChesney Martin mentioned in a speech, “The Federal Reserve, as one writer put it, after the recent increase in the discount rate, is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up.”
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