Federal Reserve walking a tightrope.
Federal Reserve Chairman Jerome Powell continues his reassurances that the punch bowl will not be removed yet. While he has indicated his inflation criteria have been achieved, his full employment criteria have not. Fed Chair Powell is walking a fine line indeed, as inflation worries have begun to concern other economists. Yet he does see tapering in the not-too-distant future and possible rate increases in 2022, a reassuring message for investors keen on the market maintaining its current upward trajectory.
Fiscal programs and the debt ceiling.
Politicking has continued unabated in recent weeks. The brief bipartisan agreement on the infrastructure bill has been overshadowed with final approval delays and across the aisle sniping over two key issues: the reconciliation package Democrats would like to pass and the U.S. debt ceiling ticking time bomb. Keep an eye on the debt ceiling debate in particular, as it has the potential to cause some market headaches. It should come as no surprise that politics is happening at pace. Nothing is squeaking through Congress without first being used as a potential bludgeon towards the other side ahead of the upcoming 2022 midterm elections.
COVID-19 and consumer spending.
Consumers have begun to retrench in the face of the delta variant. The summer consumption and economic numbers were fantastic, with corporate earnings following suit. The big question moving forward is how much of this momentum is sustainable in light of the COVID-19 resurgence.