Both stock and bond markets rallied on Fed Chair Powell’s comments at the annual Fed meeting in Wyoming. This meeting is often a venue for major policy speeches by Fed officials. The markets seized on Powell’s statement that “further, gradual” rate hikes are in order at this time in the cycle. It seems that the message is for less forward guidance and a wait and see approach to further rate hikes. Markets interpreted the message as “dovish” and possibly indicating one more rate hike in 2018 (September, with a previously assumed December hike now “off the table”) and only two more hikes in 2019. Some analysts (including Goldman Sachs) are pointing to new research papers from the Fed that bolster the case for the central bank to reign in inflation and potential asset bubbles with two hikes this year and four next year. After the speech the 10 year yield dropped to 2.81%, it has since risen to 2.88% on some positive trade news (US and Mexico), even though the much anticipated US and China talks don’t seem to be heading towards a major agreement. Regardless, the threats of massive trade wars seem to be ebbing (for now). Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners