The Federal Reserve's chair, Jerome H. Powell, warns of an increase in interest rates, sparking a shift in the Wall Street's perspective on the U.S. economy.
However, the ongoing inconsistent data makes it difficult for investors to predict the future of inflation, stock, and bond markets.
While the Federal Reserve strives to subdue inflation, recent increases in interest rates have had no significant impact in lowering inflation rates.
The debate on Wall Street intensified after Jerome H. Powell spoke to lawmakers, stating that the central bank might have to raise interest rates more than it expected and possibly at a faster rate.
Investors fear that the Federal Reserve won't be able to beat inflation without triggering a recession, and ongoing data shows that the economy continues to run hot, reigniting fears of rising interest rates.
The Federal Reserve aims to whip inflation by raising interest rates, but inflation remains intolerably high, despite several sharp interest rate increases, and the stated intention to raise rates further this year.
Investors were optimistic about inflation's peak at the beginning of the year and expected the Federal Reserve to halt its campaign of increasing interest rates.
However, the current stream of inconclusive data makes it difficult for investors to interpret the future of inflation, stock, and bond markets.
The New York Times quotes the current situation as, "Clarity about the future of inflation and the stock and bond markets would be wonderful right now, but that's just what we don't have.
" There is enormous, undecisive data, providing something for everyone, and every possible interpretation.
On the other hand, The Wall Street Journal reports that "rising bond yields reflect investors' confidence in the economy," illustrating the differing characterizations of the sources.