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Fed members push back against bets that hiking cycle is done; Powell eyed -- Federal Reserve members on Tuesday downplayed expectations that era of rate hikes has ended, setting the stage for Fed chairman Jerome Powell to potentially deliver a hawkish push back against the recent easing in financial conditions.

Rate hikes remain on table

Federal Reserve Governor Michelle Bowman was among a slew of Fed members on Tuesday to remind market participants that bets on the Fed not lifting rates again were premature.

"I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation to 2% in a timely way," Bowman said Tuesday.

Federal Reserve Bank of Chicago President Austan Goolsbee, meanwhile, acknowledged the recent progress on inflation, but said in an interview with CNBC on Tuesday that getting inflation down was" the No. 1 thing."

Treasury yields, financial conditions ease

The slew of remarks revived some investor attention on the prospect of a further rate hike, but with many still holding onto bets that the Fed hiking cycle is over, Treasury yields struggled to shake off their blues following the Fed's decision to keep rates unchanged last week as well as Powell's dovish press conference on Nov.1.

"Powell was dovish – downplaying recent strong U.S. data. This suggests that the bar for further hikes is quite high – and thus it is likely the end of the rate hikes, in our view," Nomura said in a note, ahead of remarks from the Fed chairman on Wednesday and Thursday.

The prospect of rate hike at the December and January meetings are slum at 10% and 15% respectively, according to's Fed Rate Monitor Tool.

Will Powell pushback?

The overarching message from Fed speakers on whether higher Treasury yields will help them in their mission to curb inflation was to underscore that 'the why' rates have moved higher.

If higher Treasury yields are mostly tied to expectations of what the Fed will do next, then this isn't likely to filter into the Fed's thinking on future policy.

"The rise in longer-term rates that have moved up, can't simply be a reflection of expected policy moves from us," Powell said on Nov. 1. "if we didn't follow through on them, then the rates would come back down," he added.

Yet this appears to be scenario that is playing out. Chair Powell's dovish ‘careful’ act is "leading to lower US bond yields, thus reducing market concerns of a hard landing in the future," Nomura said.

The yield on 10-year Treasury fell 9 basis point to 4.569%, slipping further away from 5.021% cycle high seen last month, while the yield on the 10-year Treasury fell 10 basis point to 4.727%.

The somewhat hawkish push back from Fed members this week comes as some fear that the loosening in financial conditions, if sustained, could muddy the Fed's job to bring inflation down to target.

Powell, however, will have opportunity, if he wishes, to "clarify anything that he said this past week when his remarks prompted an easing of financial conditions, then this would be an opportunity to do so," Scotiabank Economics said in a Tuesday note.

Powell is set to deliver opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference at 9:15 ET on Wednesday and will participate in a panel discussion at 2pm on Thursday.

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