Powell Says No Stag, No Flation.

Fed Chair Jerome Powell wasn't dovish at his presser today. But he wasn't hawkish either. He said, "I think it's unlikely that the next policy rate move will be a hike." The 2-year Treasury yield fell back below 5.00% to 4.98%, consistent with one 25bps cut in the federal funds rate over the next twelve months. The S&P 500 closed down slightly, remaining below its 50-day moving average.

The big move today was in the price of a barrel of Brent crude oil. It fell sharply (chart). It had peaked at $91.17 on April 5. It was down almost $8.00 since then to $83.44 today. It cracked through a couple of support lines. Apparently, much of the geopolitical risk premium has come out of the price, which now reflects the perception that there is plenty of oil supply and weak global oil demand. The pump price of gasoline rose 13 cents per gallon during April. It could fall during May helping to keep a lid on inflation.

In economic news, the April ADP National Employment Report showed that private sector payrolls rose by a solid 192,000. It noted: "The average pace of hiring has accelerated over the last three months after slowing late last year, almost matching gains made in the first half of 2023. Pay growth continues to slow."