Will she or won't she? With an increasing number of market participants entirely confused by the Fed's utterly failed communications policy – as it constantly changes its focus from one meeting to another – Janet Yellen's speech today on the economic outlook and monetary policy at the World Affairs Council of Philadelphia seems critical just one week out from a supposedly "live" June meeting (who market-implied rate-hike odds are now just 4%).
Credibility crushed…
Headlines from prepared remarks:
Everything is still awesome…
- *YELLEN: GRADUAL RATE HIKES LIKELY APPROPRIATE IF CONDITIONS MET
- *YELLEN SAYS SHE SEES ECONOMIC POSITIVES OUTWEIGHING NEGATIVES
- *YELLEN: CURRENT MONETARY POLICY STANCE `GENERALLY APPROPRIATE'
- *YELLEN: MAY U.S. JOBS REPORT `DISAPPOINTING' AND `CONCERNING'
- *YELLEN: CAREFUL NOT TO READ TOO MUCH INTO ONE MONTH'S DATA (Transitory?)
- *YELLEN: BELIEVE WE ARE NOW CLOSE TO ELIMINATING LABOR MKT SLACK
- *YELLEN: OTHER LABOR MKT INDICATORS HAVE BEEN MORE POSITIVE (excepy The Fed LMCI!!??)
- *YELLEN: JOBS DATA SHOWED WAGE GROWTH MAY FINALLY BE PICKING UP
- *YELLEN: CAUTIOUSLY OPTIMISTIC OVERSEAS HEADWINDS NOW FADING
But…
- *YELLEN: GLOBAL RISKS REQUIRE CONTINUED ATTENTION
- *YELLEN: BREXIT VOTE TO LEAVE MAY HAVE SIGNIFICANT REPERCUSSIONS
- *YELLEN: CHINA FACES CONSIDERABLE CHALLENGES AS IT REBALANCES
Live Feed (Yellen is due to speak at 1230ET, followed by a Q&A)…
With the narrative that a Fed rate-hike reflexively proves the economy is strong, how does Yellen justify a confidence-inspiring rate-hike following Friday's jobs data and today's collapse in The Fed's own labor market indicator?
Of course stocks don't care… good news is good news (confirms Fed narrative), and bad news is better news (enables Fed to stay lower for longer) – until it's not.
Little bit of weakness heading into Yellen.
Her full comments (link):
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