Recent comment by Fed Vice Chair Donald Kohn:

If longer-term inflation expectations were to become unmoored–whether because of a protracted period of elevated headline inflation or because the public misinterpreted the recent substantial policy easing as suggesting that monetary policy makers had a greater tolerance for inflation than previously thought–then I believe that we would be facing a more serious situation.

This could be telling. It hasn’t been said before by any FOMC member, and it was voluntary, in that no one asked the question.

It is something he is trying to communicate.

The FOMC sees inflation expectations showing signs of elevating, and is wondering whether it is at least partially responsible.

Their ‘theory’ had told them there was an inflation price to pay for cutting into a triple negative supply shock if it went so far as to allow inflation expectations to accelerate.

Credit spreads are in substantially from the wides, GDP isn’t collapsing and forecasts are for modest improvements.

Fiscal rebates are kicking in, being spent, and supporting prices.

Inflation is ripping, and now has the full attention of the FOMC.

Oil 130+

Dollar down

Stocks down a touch

Interest rates up a touch