Powell to stay on at the Fed

Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Wednesday, April 29th, and I'm your host, Kim Kahn. Today is a special Fed edition of Wall Street Lunch. Jerome Powell said he will remain on the Federal Reserve Board as a governor until he is satisfied that the Justice Department's investigation into the Fed is truly resolved. In his final press conference as chairman, Powell struck a firm tone. While welcoming the DOJ's decision to close the probe, he noted the department also said it could reopen the investigation, leaving him with no choice but to stay to safeguard the Fed's independence. And literally staying because of the actions of the administration, Powell said, adding that his concerns were not about verbal criticism by elected officials. President Donald Trump has repeatedly criticized Powell for not cutting rates, and recently said he would move to fire him if he stayed on. Powell said his tenure as governor will continue for a period to be determined. My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors, Powell said. These legal actions by the administration are unprecedented, he added. I worry these attacks are battering the institution. Renaissance Macro said the question now is whether Trump takes the bait and decides to go after Powell for doing something that is within Powell's remit. adding that any attempt to remove him would escalate tensions around Fed independence. Powell said he intends to keep a low profile when Kevin Warsh takes the helm. The Senate Banking Committee earlier advanced Warsh's nomination to the full Senate Tom Graff CIO at FACET said Powell can say what he wants about not being a shadow chair but his words are going to carry so much weight with the FOMC My guess is Powell becomes a stand for Fed independence within the FOMC As for the decision itself the FOMC held rates steady at 3 to 3 as widely expected. But there were four dissenting votes, the most since 1992. Steve Myron voted for a rate cut as usual. Beth Hammock, Neil Kashkari, and Lori Logan, though, dissented over what they viewed as an easing bias in the statement, arguing policy language should remain neutral between hikes and cuts. Macro strategist Dario Perkins said, the dumb take is that Powell has lost control. The smart take is that this is the FOMC telling Warsh he won't have control. Following the decision in press conference, market-applied odds of rates staying steady through the year rose up slightly to 88%, with pricing showing slightly higher odds of a hike at the end of the year than a cut. After all that, stocks ended little change as traders reset for an onslaught of post-market earnings. The S&P 500 and NASDAQ finished barely in the red, while the Dow lost 0.6%. The real Fed reaction showed up in the treasury market, where yields moved higher across the curve. The two-year yield, most closely tied to the Fed's funds rate, rose nine basis points to 3.94%. The benchmark 10-year climbed six basis points to 6.62%. The 30-year saw resistance at the 5% level through the day, but ended up rising five basis points to 4.99%. As Powell stepped away from the lectern for the final time as chair, he closed with a simple line. Thank you very much, everyone. I won't see you next time. That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at seekingalpha.com slash WSB. And for a full suite of news, analysis, ratings, and data on stocks and ETFs, go to seekingalpha.com slash subscriptions.