Janet Yellen testimony likely to emphasize the positives – MUFG

By FXStreet Derek Halpenny, European Head of GMR at MUFG, suggests that we have the semi-annual testimony to Congress by Fed Chair Yellen, starting today in front of the House Financial Services Committee.

Key Quotes

“No doubt there will be a much greater focus on recent developments in the global financial markets given the deterioration since we last heard from Chair Yellen at the FOMC press conference in December when rates were raised for the first time since 2006. Since the turn of the year, the 2-year UST bond yield is over 30bps lower and the Dec 2016 fed funds futures contract has removed 45bps of monetary tightening from the market. The current price implies there is only a 50% probability that the next rate increase will come at the final meeting of 2016. So the market turmoil since the start of 2016 has removed considerably the expectations of rate increases.

Currently the FOMC DOTS imply four rate increases and hence it is very likely that today’s testimony will to some degree acknowledge that the DOTS are no longer realistic. March is clearly off the table and we think, while April is possible, the most realistic next time to consider a hike is at …read more

Source:: FX Street