Fed Chair Yellen will be presenting her semi-annual monetary policy testimony - sometimes called the "Humphrey-Hawkins" testimony - today (House Financial Services Committee) and tomorrow (Senate Banking Committee). Her prepared remarks offered little new information over the January FOMC Statement but the Q&A will likely be the most market-moving as politicians likely demand she "get back to work" for the good of the nation's shareholders.
Live Feed (testimony is due to begin at 10ET)
As we detailed last night, Citi's chief FX strategist Englander hinted at what would be Yellen's "Draghi Moment":
The dovish surprise is if she explicitly removes March from the hiking calendar (which would be Draghi-esque in front running the FOMC), broadly hints at a delay or expresses concern on downside risk to long term inflation or structural stagnation. The intention would be to show US households, business and investors that the Fed has their back.
This is not what she offered, and markets are disappointed. In fact, the most dovish Yellen went was to mention stocks and tightening financial conditions:
Yellen also admitted once more that the Fed's engaged in policy error:
Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar... In the fourth quarter of last year, growth in the gross domestic product is reported to have slowed more sharply, to an annual rate of just 3/4 percent; again, growth was held back by weak net exports as well as by a negative contribution from inventory investment
- *YELLEN: FED EXPECTS ECONOMY TO WARRANT ONLY GRADUAL RATE RISES (everything is fine)
- *YELLEN: JOB, WAGE GAINS SHOULD SUPPORT INCOMES AND SPENDING (everything is awesome)
- *FED REPORT: LEVERAGE RISKS IN FINANCIAL SECTOR `REMAIN LOW' (so don't worry about banks)
- *YELLEN: FINANCIAL STRAINS COULD WEIGH ON OUTLOOK IF PERSISTENT (so, there's chance)
Headlines from the Q&A to follow...
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Full Prepared Remarks below...