The US markets, equities in particular, staged a nice rally as new Federal Reserve Chair Janet Yellen reassured us that the bank will leave monetary policy as is and continue to provide some stimulus. This reassured the markets the Fed would continue to provide stimulus to boost the economy. Still, some found her testimony weak in some areas.
Yellen failed to relay to us, clearly, how the Fed will continue on its course of price control. Over the past 100 years, they have manipulated interest rates, but until recently they have never used the equity markets like a lever for public policy. The Fed now has its finger on the scales of the country’s finances.
Yellen was softer spoken and certainly more to the point than Bernanke was but she failed to disclose that the Fed has been manipulating interest rates and the US Dollar.
Continuity Helped Rally the Markets
There is also some concerns about the stimulus program, but she gets an A for continuity. This helped rally the markets for their fourth straight session. The S&P 500 and Nasdaq Composite have now seen their best four day stretch of a young 2014.
There are many who think she nailed her first testimony as Fed Chair. That is why the markets responded so positively to her remarks. However, she has some odd nuances to her speech and delivery, that someone who will have to “jawbone” or talk the markets into a certain direction will have to be mindful of. As the testimony went on, we noted a downward mouth at ties which alluded to unhappiness as well as crossing her arms which does give the impression she is holding the person she is addressing with contempt and even anger. We will have to get used to these “normal behaviors” and not jump to conclusions.
All in all she did a good job letting us know she will continue to follow certain benchmarks like the unemployment rate and labor market as it pertains to rates. She did a good job, being plain spoken that the Fed would leave rates near zero well after unemployment fell below the target of 6.5 percent and inflation hit 2.5 percent. This reassured us even more of the fed’s intentions to continue to stand as the backstop supporting the economic recovery of the country.
She might have been a little nervous or showed some signs of anxiety during her first ever report to Congress ad first ever pubic remarks since taking over, but all in all she did a good job.
BINARY OPTION’S TAKE FOR TODAY
The rally in the equity markets should continue today absent any bad economic data. Also the Dollar should rise against some of its benchmarks like the Euro and Yen.