When Theodore Roosevelt encouraged policymakers to “speak softly and carry a big stick,” clearly, his target audience was not central bankers. Chairman Powell’s speech was significant because its message was precisely counter to what markets started to price in since mid-June.

Measures of inflation breadth (how many items are seeing big jumps in prices) and stickiness (those items that tend to see slower price changes) remain elevated. This makes the Fed’s job difficult, as it points to a long journey to get back towards 2%.

Recession alarm bells have been ringing louder after the U.S. economy shrank for the second straight quarter. 2022 stands as the worst year on record for bonds leading some investors to pile into municipal debt because it is considered safe.