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Short-end rates drift higher as Fed weighs demand vs supply shocks

Mortgage News Daily says the Fed is using Chair Christopher Goolsbee's comments to assess whether inflation is demand driven, which would imply a higher outlook for the federal funds rate.

Reported · Written up by our desk · Economy

Mortgage News Daily described an uneventful bond session, with Treasuries trading mostly sideways in a relatively narrow range after a modest improvement overnight.

The outlet said short end rates, specifically 2-year and shorter maturities, finished slightly higher, though they saw earlier volatility around Fed comments from Christopher Goolsbee related to inflation and the expected rate path.

According to Mortgage News Daily, Goolsbee indicated the Fed is trying to sort out whether “supply shock” inflation is the main driver or whether inflation is being driven by demand, and that he is hearing reports and seeing indications of the demand-driven side.

The piece adds that this framing points toward a higher implied federal funds rate outlook, reflecting how the demand versus supply assessment could affect the policy path.

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