A March rate hike looks like a shoo-in. The dollar will continue to flex.
Federal Reserve chairwoman Janet Yellen is currently busy discussing the direction of U.S. monetary policy with the Senate Banking Committee, her first in the era of Donald Trump. (See her prepared remarks here.) Trump has gone on the record more than once saying the Fed’s near zero interest rate policy has contributed to asset bubbles in real estate and in the Dow. Worth noting: following last week’s resignation by Fed official Daniel Tarullo, Trump now has three vacancies to fill and could fill it with those who are more wary of runaway markets. Yellen has 12 months left as chairwoman. The market expects that she will emphasize how the Fed is close to meeting its dual mandate on full employment and controlled inflation today. Three 25 basis point increases in the Fed funds rate are on everybody’s mind and that is already baked into the cake for government bonds.
Yellen might also discuss to how the Fed intends to unwind its balance sheet, which may be an alternative method to conventional interest rate increases. Money managers will be looking to gauge whether it will be three hikes or less and allocate investments based on that view.
Yellen will speak again tomorrow on Capitol Hill. She is likely to reject the idea of central bank-induced asset bubbles, which should harken us back to the days of Alan Greenspan’s claim that — on one hand there was irrational exuberance in the market and on the other hand there was no housing bubble. In previous testimonies, Yellen rejected concerns about historically high equity valuations in the S&P 500, bond markets and in commercial property. Janet Yellen Basically Confirms March Rate Hike
A March rate hike looks like a shoo-in. The dollar will continue to flex.
Federal Reserve chairwoman Janet Yellen is currently busy discussing the direction of U.S. monetary policy with the Senate Banking Committee, her first in the era of Donald Trump. (See her prepared remarks here.) Trump has gone on the record more than once saying the Fed’s near zero interest rate policy has contributed to asset bubbles in real estate and in the Dow. Worth noting: following last week’s resignation by Fed official Daniel Tarullo, Trump now has three vacancies to fill and could fill it with those who are more wary of runaway markets. Yellen has 12 months left as chairwoman. The market expects that she will emphasize how the Fed is close to meeting its dual mandate on full employment and controlled inflation today. Three 25 basis point increases in the Fed funds rate are on everybody’s mind and that is already baked into the cake for government bonds.
Yellen might also discuss to how the Fed intends to unwind its balance sheet, which may be an alternative method to conventional interest rate increases. Money managers will be looking to gauge whether it will be three hikes or less and allocate investments based on that view.
Yellen will speak again tomorrow on Capitol Hill. She is likely to reject the idea of central bank-induced asset bubbles, which should harken us back to the days of Alan Greenspan’s claim that — on one hand there was irrational exuberance in the market and on the other hand there was no housing bubble. In previous testimonies, Yellen rejected concerns about historically high equity valuations in the S&P 500, bond markets and in commercial property.