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More from Powell: Comments on wage growth, yield curve vs. neutral rate

Jul. 17, 2018 12:15 PM ETTLT, TLH, SPTL, EDV, TBT, TMF, TMV, TBF, ZROZ, VGLT, UBT, DLBL-OLD, DLBS, TYBS, TTT, VUSTX, OPERBy: Liz Kiesche, SA News Editor3 Comments
  • Fed Reserve Chairman Jerome Powell says lack of productivity gains is the reason that wage growth has been subdued.
  • While the FOMC has the tools to stimulate economic growth, it doesn't have the tools to increase wage growth--Congress does, he said.
  • He explained that productivity hasn't improved much due to "a number of years of very weak investment after the financial crisis."
  • Regarding the flattening yield curve, "what really matters is neutral rate of interest," Powell said; neutral rate of interest is the point at which the interest rate neither helps or hinders the economy.
  • "The shape of the curve is something we've talked about quite a lot," he said, referring to the FOMC. "I think of it being the question: What is the message from the longer-run rate about neutral rates."
  • In midday trading, the 10-year Treasury yield fell just under 1 basis point to 2.851% and the 2-year Treasury yield rose just under 1 basis point to 2.607%, bringing the spread between the two to 24 points--narrowing from 26 points on Friday.
  • Today's hearing concluded; Powell appears before the House Financial Service panel tomorrow at 10 AM ET.
  • Source: Hearing video.
  • ETFs: TLT, TBT, TMV, TBF, EDV, TMF, TTT, ZROZ, VGLT, TLH, UBT, SPTL, DLBS, VUSTX, TYBS, DLBL, OPER

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