The economy still needs support from the Fed

Federal Reserve Chairman Jerome Powell has assured in his testimony before the Senate Banking Committee that. inflation and employment still remain well below targets of the U.S. central bank. Thus justifying the need to continue with an ultra-accommodative monetary policy.

Indeed, despite the sharp rise this year in bond yields that accompanies heightened concerns about inflation; Powell has insisted that price pressures remain for the most part "soft" and the economic outlook "very uncertain".

"The economy is a long way from our employment and inflation targets and it will likely take some time to make further substantial progress"; the Fed chairman assured before facing questions from senators.

As he has done in the past, Powell reiterated that the central bank is "committed" to using all available tools to support the economy to help ensure that the recovery from this difficult period is as strong as possible.

However, in his remarks, Powell made no mention of the market's most pressing concern. So far in 2021, the rise in yields on longer-duration government bonds has returned to levels not seen since before the pandemic. The 30-year bond yield, for example, has risen by more than half a percentage point. Additional, the 10-year Treasury yield has risen by 44 basis points.