Federal Reserve Chairman Jay Powell testified on consecutive days before the Senate Banking Committee and the House Financial Services Committee, respectively. Chairman Powell, as he so often does, stuck closely to the script and tried to bob and weave his way around loaded questions and partisan punji pits. Powell has gotten accustomed to the dance and maybe even good at it. In an undercurrent you might not have necessarily noticed if you don’t watch Congressional hearings intently, Republicans kept giving Powell ‘attaboys while they were conspicuously absent from the other side of the aisle. Progressives are already calling for a candidate more in their ideological lane when Powell’s term expires in about eleven months.

Powell was asked whether he thought asset bubbles were forming. He said it was a ‘a very mixed picture’ and that some areas of the market exhibited potentially excessive valuation levels, while other important areas for financial stability like leverage and funding risk remained quite healthy. As a demonstration of the dynamics referenced in his remarks, even though there was chaos in bond markets this week as yields rose rapidly, the Stable Overnight Funding Rate (SOFR), the interest rate benchmark that has finally replaced the tarnished LIBOR, hi...

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