Testimony

Adventures In 'Quantitative Tightening'-Lane

"Here, in the spirit of modest contemplation, we offer several hunches, inklings, conjectures, and guesses as to what quantitative tightening might mean. These are not predictions. They’re merely a starting point from which you can extend out your own visions into the future..."

Deutsche: The Fed Has Created "Universal Basic Income For The Rich" And Now It Can't Get Out

"The accommodation and QE have acted as a free insurance policy for the owners of risk, which, given the demographics of stock market participation, in effect has functioned as universal basic income for the rich. It is not difficult to see how disruptive unwind of stimulus could become. Clearly, in this context risk has become a binding constraint"

Weekend Reading: Yellen Lets Doves Fly

The problem for the Fed remains the rising risk of a monetary policy error against a backdrop of an over valued, over leveraged and overly bullish financial market. Historically such combinations have tended not to turn out well.

Goldman Revises Its Fed Rate Hike Odds After Latest Disappointing Data

"We adjusted down our Fed odds accordingly. We now believe there is a 5% probability that the next rate hike will come in September, a 5% probability that it will come in November, and a 50% probability that it will come in December (a 60% cumulative probability of at least three hikes this year)."

Global Shares Hit Another Record High In Lethargic Session Ahead Of US Data Deluge

It was another painfully low-volume overnight session, which however did not prevent global stocks from hitting another record highs, capping their best week in over two months as the dollar stayed close to nine-month lows following Yellen's dovish retreat in which she noted caution on persistently low inflation as odds of future rate hikes in 2017 and 2018 dropped.

Is Yellen Trying To Ride Into The Sunset?

"Yet I can’t help but wonder if Yellen simply doesn’t want to upset the apple cart towards the end of her term. She can see the finish line and I have no doubt she is hoping to make it without a financial crisis, she is simply trying to not make a mistake. So instead of reinforcing Dudley and Fischer’s message, she plays it safe...But worries about overly easy financial conditions have not suddenly disappeared..."

Decoding Yellen's Message

"I know you think you understand what you thought I said, but I’m not sure you realize that what you heard is not what I meant..."

Watch Live: Yellen Testimony Day 2, And Three Questions She Should Answer

It's time for day two of Yellen's semi-annual testimony with the Fed Chair today appearing before the Senate Banking Committee. While the prepared remarks are identical, in her speech on Wednesday, Yellen said the U.S. economy should continue to expand over next few years and stressed a gradual approach to tightening as central bank monitors inflation. The attention will be on the Q&A.