Good morning contrarians! Stock futures are gaining a bit of ground as bonds continue their rally ahead of the Fed chair’s appearance in DC…

One probably shouldh’t expect too much from Powell today. Typically the Fed doesn’t use these congressional testimonies to announce major changes in policy. It’s more of a charade where Powell pretends to care about the politicos’ questions while sticking to some clear talking points — in this case price stability and inflation. Some senators may take the opportunity to hold his feet to the fire over past policies but this will all be theater.

Doesn’t mean there won’t be headlines to come from it and doesn’t mean markets won’t (over)react to these headlines.

The Fed’s hands are still tied. Inflation is still well above their comfort level (and increasing, according to the latest figures) while employment data show an economy still in plentiful job creation mode. Until those facts change, the Fed simply can’t loosen monetary policy.

On that, the move in bonds this week is interesting. Maybe bond markets are telling us something we don’t know? Markets can’t see the future either. It may just be more hope-ium.

More in today’s briefing/podcast: