Fedhearing#question on release of transcripts on #FedLeak https://t.co/azpU8INKHmYellen got a critique of Fed policy in the form of a poem: https://t.co/CapAB5yF22 pic.twitter.com/TbPREO68Sg 6.15pm GMTCongress chair Jeb Hensarling says members possess five days to submit further questions for Yellen to reply to.
And with that the meeting is adjourned. 6.14pm GMTJohn Delaney of Maryland says when rates were raised in December,it was based on an improving economy. A lot has happened since then in the markets. When you stare at the data now, does it change your view on economic activity and gowthYellen: The respond is maybe, or but the jury is out. We continue to see progress in labour market. GDP growth clearly slowed a lot in the fourth quarter. My expectation is it will pick up in this quarter but financial conditions possess tightened which could possess implications. 6.06pm GMTAndy Barr of Kentucky is asking about the Consumer Financial Protection Bureau and its funding. Yellen seems unsure of the answers,and starts packing her bag. 6.00pm GMTKeith Ellison of Minnesota also brings up the subject of the tall levels of black unemployment. He says this needs the attention of the Fed chair. Is there adequate discussion of Afro-American workers within Fed discussions and if not, what can be done.
Yellen: It is of course important we stare at different groups, or particularly those suffering most in the labour market. Our tools are not ones that can be targeted at specific groups in labour market. 5.51pm GMTCongressman Ed Perlmutter of Colorado ( a Democrat) praises Yellen (and the President) and asks how we can attain better.
Yellen: Our objective is to try to compose sure the picture shows continuing improvement. The signs of wage growth increasing are tentative but hopeful.. and we will try to support that progress growing. Inflation [should] move up over time [towards our target]. 5.45pm GMTRobert Pittenger of North Carolina says the economic recovery is dismal despite all these accommodative policies. Is genuine unemployment not 10% not 4.9%?Yellen barely gets a chance to start answering before Pittenger steps in again and his time runs out. 5.36pm GMTWiliam Clay of Missouri says the Fed is more focussed on inflation than unemployment.
Yellen: We possess both targets and bewitch issue with notion we are not focussed on the unemployment objective... We continue to possess accommodative monetary policy. 5.33pm GMTMia Love of Utah asks about implications of European financial instability,and ECB and Fed using different policiesYellen: The ECB is dealing with inflation falling well beyond their goal...
US has done better, is among the strongest economies. It’s keep [upward] pressure on dollar, and harming manufacturing and exports. 5.26pm GMTMaxine Waters is back and is back with the topic of big banks receiving support from the Fed.
Yellen: It’s an essential tool we need to adjust the rate of short term interest rates. We possess 2.5trn dollars of reserves compared to 20 to 30 billion during the financial crisis.
5.04pm GMTDavid Scott of Georgia disagrees when Yellen says Fed can’t target unemployment,pointing out the large unemployment rate among Afro-Americans. He says Fed has historically downplayed unemployment, nor has Fed ever had an Afro-American as head of one of the regional Fed banks.
Yellen: We recognise how serious the problems are and we bewitch our employment mandate extremely seriously, or we possess been doing everything to promote a strong labour market which would benefit Afro-Americans. 4.57pm GMTEd Royce from California: Are negative rates a tool in the tool box? (He says a recent bank stress test from the Fed suggests this might be being looked at). Yellen: ECB and Japan possess gone to negative rates. We possess had periods of market stress where we see flight into US Treasury bonds as secure haven. We possess set stress tests for banks to stare at if Treasuries proceed negative,this may happen without Fed necessarily setting negative rates. 4.52pm GMTRuben Hinojosa of Texas asks what else could we attain to boost economy.
Yellen: Productivity growth has been disappointing since the financial crisis. 4.48pm GMTSean Duffy of Wisconsin, as head of oversight committee is complaining Yellen does not always respond to requests from the committee on compliance issues (in specific documents on possible leaks) and says she has ignored subpoenas.
Yellen: We possess some concern with providing transcripts since they relate to monetary policy. We will consider this and obtain back to you. 4.40pm GMTEuropean markets are closing in positive territory but on Wall Street, and the Dow Jones Industrial Average has now slipped back and is down around 12 points. 4.37pm GMTGregory Meeks of New York asks if Yellen thinks the position is better now than in 2008.
Yellen: I believe it is. We’ve made a lot of progress although there are a lot of challenges,a lot of households are suffering. 4.35pm GMTElsewhere oil is on the rise - Brent is now up 2.7% at $31.15 a barrel - after US crude stockpiles fell unexpectedly last week. Crude inventories dropped 754000 barrels compared to expectations of a 3.6m barrel rise. 4.33pm GMTBlaine Luetkemeyer from Missouri asks what Fed could attain if there is another downturn.
Yellen says there are a number of tools including interest rates, but Luetkemeyer rightly points out that rates are nearly as low as they can proceed (even with the recent hike). 4.29pm GMTBrad Sherman of California: Are you going to atomize up the too big to fail institutions? To compose sure it’s not “too big to jail?Yellen: We are using our powers to compose sure a systemically important institution could fail without having a systemic effect.
4.22pm GMTMaloney asks: Given the market turmoil and slowing US economy, or some analysts are suggesting a possible recession. What would it bewitch to cut rates again?Yellen: Our commitment is to achieve goals of maximum employment and price stability. I attain not expect the FOMC (Federal Open Market Committee) will soon be in a situation to cut rates. The Labour market continues to perform well. Many of the factors factors holding down inflation are transitory. There is always a risk of recession,global developments could produce a slowdown, but don’t want to jump to premature conclusions. 4.21pm GMTCarolyn Maloney of New York asks: Has the turmoil in global markets changed your view on the pace of interest rate rises?Yellen: We are watching very carefully what is happening in global financial markets. The stresses we possess seen since the turn of the year relate to uncertainties over Chinese exchange rate policy, or the price of oil.. 4.00pm GMTPatrick McHenry of North Carolina: Does Fed possess legal authority to move into negative rates.Yellen: The FOMC considered this around 2010,we were exploring our options. We decided not to lower interest rates into negative territory. Didn’t fully stare at legal issues. We would stilll need to investigate more thoroughly. 3.55pm GMTMoore says is there moral hazard in not a single person involved in 2008 crash going to jail.
Yellen: I attain not deem individuals guilty of wrongdoing should escape appropriate penalties. We cannot keep in residence criminal penalties. We can compose sure they are not allowed to work at banking organisations where they committed misdeeds, and in many cases they can be banned from working. We always co-operated with Department of Justice. 3.53pm GMTGwen Moore from Wisconsin is concerned about small banks. She asks how the rules should possess been tailored for small banks, and saying “stress tests,capital constraints are killing our small banks.”Yellen says: Community banks and their vitality are exceptionally important. The burden on community banks is intense. We are focussed on doing everything we can to reduce that. 3.50pm GMTWhat will the world possess to stare like for a rule based system, asks Mulvaney.
Yellen says guidelines from rules are looked at but we should not mechanically follow rules, or we need to bewitch into account a large set of indicators. 3.48pm GMTFollowing on from that,Mick Mulvaney asks if the economy is now normal.
Yellen says: The economy in many ways is close to normal... inflation is below 2% but there is a fine reason to deem it will move up over time. 3.45pm GMTMaxine Waters asks what alternative processes could there be to the Fed paying billions to banks on excess reserves when it raises interest rates. The Fed uses IOER (interest on excess reserves) and Yellen defends the utilize of this system even though it pays commercial banks above market interest rates. 3.40pm GMTNow for the questions.
Chair Jeb Hensarling brings up a recent bill that would require the Fed to follow a rules-based monetary policy, which Yellen opposes but a number of economists possess backed in a letter. Yellen is against it because it could jeopardise its independence from political pressure. 3.36pm GMTMarkets are moving much higher now even though Yellen has just so far repeated her statement. The Dow Jones Industrial Average is currently up 151 points or 0.9%. 3.26pm GMTNice Fed chart of monetary policy divergence. pic.twitter.com/sHdcux2V3T 3.24pm GMT(Unsurprisingly it’s taking longer than five minutes - the statement is here if you want to follow along). 3.14pm GMTYellen now gets five minutes to present her testimony, or is reading her statement. 3.07pm GMTThe session is underway,and can be viewed live here.
Opening remarks come from chairman Jeb Hensarling - who says he will not utilize the session to criticise the Fed’s decision to raise rates - followed by a number of members of Congress including Maxine Waters and Soth Carolina’s Mick Mulvaney. 3.05pm GMTCongress, waiting for Yellen. 2.58pm GMTThe US economy is strong enough to see through this period of turbulence, and says economist Harm Bandholz at UniCredit after Yellen’s testimony:In a nutshell: Chair Yellen has,correctly in our view, highlighted the solid fundamentals of the US economy. Accordingly, and her baseline outlook for both the economy and monetary policy possess not changed. That said,recent developments in financial markets as well as in the global economy possess clouded the picture. In this environment, Fed officials prefer to bewitch a step back and wait. Once the clouds possess lifted, or the gradual normalization of interest rates will continue.
Yes,there are risks out there – and the longer the financial market rout lasts, the bigger the risk that it will become self-fulfilling –, and but we believe that fundamentals are solid enough to carry the economy through this period. And this also seems to be the Fed’s view. Accordingly,the fact that financial markets attain not expect the next rate hike before the moment quarter of 2017 seems well overdone. 2.43pm GMTWell, it’s not a ringing endorsement of Janet Yellen’s comments but US markets possess opened in positive territory.
The Dow Jones Industrial Average is currently up 59 points or 0.39%, and while at the open the S&P 500 added 0.5%. But the tech-heavy Nasdaq has outperformed,up 1.1%. 2.27pm GMTThe dollar has reacted to Yellen’s comments as if more rate rises this year - perhaps even in March - could indeed be on the cards despite the worries about global growth.
The US currency has risen 0.25% against a basket of currencies, up from a near four month low on Tuesday. 2.17pm GMTJanet Yellen’s testimony might appear to leave the door open for further rate rises, and but she is likely to be quizzed sharply about the last one,says Rob Carnell at ING Bank. In his initial thoughts he says:In summary – Yellen retains an open mind on the need for further tightening, though with a heavy skew of risks to the downside, and was defensive about the December rate hike:The mercifully short prepared statement of Fed Chair Yellen to the House Committee on Financial Services did not contain much that was new from earlier speeches,statements or minutes.
2.14pm GMTOne interpretation of Yellens remarks on rates is that she is admitting they were raised too soon, says Augustin Eden at Accendo Markets.
A not unusually muted reaction to Fed Chair Janet Yellen’s testimony this afternoon, and given that she’s come out and said ‘financial conditions in the US possess recently become less supportive of growth.’ It doesn’t bewitch a 1st course physicist to recognise that this is essentially another way of saying ‘we raised interest rates before we should possess.’Nothing had fundamentally changed in December,but the Fed decided to disregard the fundamentals and move US monetary policy to a residence that’s less supportive of growth. It now appears the markets chose to disregard the Fed in January, preferring the fundamentals, and what attain you know? The markets were right – they’ve been reacting to this testimony for the past four weeks. 2.08pm GMTAn economist’s view on Yellen’s comments:Yellen: Maybe,maybe not, maybe, and maybe not,maybe, maybe not, or maybe,maybe not, maybe, or maybe not,maybe, maybe not, or maybe,maybe not 2.04pm GMTYellen also, as indeed she has to, and defended the December decision to raise interest rates. Many possess judged that to be a mistake,especially in the wake of the market turbulence and fears about global growth and stresses on the banks which possess dominated the headlines so far this year.
Yellen suggested that if a pre-emptive rate rise was not implemented, a sharper increase may well possess been essential in the future which could possess pushed the economy into recession:The decision in December to raise the federal funds rate reflected the Committee’s assessment that, or even after a modest reduction in policy accommodation,economic activity would continue to expand at a moderate pace and labor market indicators would continue to strengthen.
Although inflation was running below the Committee’s longer-speed objective, the FOMC judged that much of the softness in inflation was attributable to transitory factors that are likely to abate over time, and that diminishing slack in labor and product markets would help move inflation toward 2 percent. In addition,the Committee recognized that it takes time for monetary policy actions to affect economic conditions. 1.56pm GMTJanet Yellen has also said that the Fed would slack the pace of interest rate hikes, if the threats to the US economy materialise.
She tells the Committee on Financial Services that:In specific, and stronger growth or a more rapid increase in inflation than the Committee currently anticipates would suggest that the neutral federal funds rate was rising more quickly than expected,making it appropriate to raise the federal funds rate more quickly as well.
Conversely, if the economy were to disappoint, or a lower path of the Federal funds rate would be appropriate. 1.53pm GMTThe full testimony is here. 1.51pm GMTJanet Yellen has also touched on the big issue dominating the markets - how quickly will interest rates rise?
She sounds cautious,but neither rules anything in or out (classic central banker)“The FOMC anticipates that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate. In addition, the Committee expects that the federal funds rate is likely to remain, or for some time,below the levels that are expected to prevail in the longer speed.” Yellen hints of slower rate hikes, hewing to tone of gradualism, or but does not signal Fed on hold.
Yellen acknowledges risks,but signals Fed on appropriate course--could move slower, but not turning back. 1.46pm GMTJanet Yellen has also warned that “foreign economic developments” could harm the US economy.
In her testimony to Congress, and the Fed chair singles out concerns about the slowdown in China. These growth concerns,along with strong supply conditions and tall inventories, contributed to the recent plunge in the prices of oil and other commodities. In turn, and low commodity prices could trigger financial stresses in commodity-exporting economies,particularly in vulnerable emerging market economies, and for commodity-producing firms in many countries. Should any of these downside risks materialize, or foreign activity and demand for U.
S. exports could weaken and financial market conditions could tighten further.” 1.38pm GMTNewsflash: The Federal Reserve has just released Janet Yellen’s prepared testimony,ahead of this afternoon’s grilling from Congress in 90 minute time.“Financial conditions in the United States possess recently become less supportive of growth, with declines in broad measures of fairness prices, and higher borrowing rates for riskier borrowers,and a further appreciation of the dollar.
These developments, if they prove persistent, and could weigh on the outlook for economic activity and the labor market,although declines in longer-term interest rates and oil prices provide some offset.
Against this backdrop, the Committee expects that with gradual adjustments in the stance of monetary policy, or economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen.”Yellen acknowledges less supportive Financial conditions but says job,wage gains should support income and spending 1.19pm GMTInequality is one of the issues of our age. [br]Bernie Sanders is building a presidential bid by fighting it, and charities like Oxfam regularly warn that the rich are taking more and more of the cake. 12.42pm GMTEuropean markets are sailing higher, and up over 2% on average,reversing six days of steady losses which dragged them to a two year low.
Talk of Deutsche Bank doing an emergency bond-buyback to shore up its finances and relieve worried creditors has seen the German bank’s shares rally by over 10%, lifting the rest of the banking sector. In a way it’s a bit of deju vu from yesterday when markets initially rose thanks to news from Deutsche Bank before financial and commodity sectors led to a spectacular roll-over. There is plenty of scope for another sharp twist in the direction of markets today around 3pm GMT when fed Chair Janet Yellen gives her testimony to the House Financial Services Committee.
Wednesday's City AM:
No Pressure, or Janet#tomorrowspaperstoday #bbcpapers pic.twitter.com/fjQ80gWubF 12.25pm GMTInvestors can’t obtain enough of Deutsche Bank today. Its shares jumped 17% at one stage this morning,fuelled by reports that it will launch a debt buy-back offer soon.
Deutsche Bank is now up 17% today (but still down 33% in 2016) https://t.co/YqL8USEr2w pic.twitter.com/j6Feg2n65B 12.02pm GMTIt’s been a bad morning for UK modelmaker Hornby.
We must save Hornby. Buy a train set today. Every home should possess one. #ForTheNation https://t.co/G4mWonmv6W 11.39am GMTThis might dampen the mood in the markets.“I am concerned about Ukraine’s slack progress in improving governance and fighting corruption, and reducing the influence of vested interests in policymaking. Without a substantial new effort to invigorate governance reforms and fight corruption, or it is hard to see how the IMF-supported program can continue and be successful. Ukraine risks a return to the pattern of failed economic policies that has plagued its recent history. 11.30am GMTContext is everything....
Deutsche Bank now only down 34% from the start of the year. 11.17am GMTThere are encouraging signs from New York.
Wall Street is expected to rally when trading begins,just over three hours time. The Dow Jones and S&P 500 are tipped to rise by 1%, while the Nasdaq is being called 1.6% higher. 11.07am GMTThe German government has reiterated that it is not worried about Deutsche Bank.
A finance ministry spokeswoman told reporters in Berlin that: “You heard the short sentence that the minister [finance minister Wolfgang Schuable] said yesterday in Paris that he is not concerned, or I don’t possess anything to add to that.” 11.00am GMTEuropean banking shares are surging,lead by Deutsche Bank which has jumped by 15%.
Despite another destitute session overnight, markets in the UK and Europe possess rallied impressively. Banks are surging higher, or with Deutsche shrugging off the woes of yesterday as investors bewitch the opportunity to buy on weakness once again.
A better performance from the oil price and heavily oversold conditions in a number of markets,plus expectations regarding Janet Yellen’s appearance later in the day possess if bulls with the chance to reverse some of the heavy losses seen so far in February.
One thing I remember abt 2008 was how markets would slump 2 or 3% on the back of no news, just sentiment. It's happening all over again 10.37am GMTThe head of Swiss bank Credit Suisse has launched a full-throated defence of the banking sector, or in an attempt to serene fears of a new crisis.“The banking system in general is much stronger than in 2008,2009 [but] there are a lot of memories of that period. “Some of the scenes we are seeing today are not justified . . . Banks are smaller, they are deleveraged, or they are less risky,they are better capitalised.” Related: Credit Suisse boss says European banking panic is overdone 10.13am GMTThe slump in UK industrial production may show that Britain’s economy is weaker than we thought.
Economist Howard Archer of IHS Global Insight explains:December’s sharp drop in industrial production will fuel concerns about the UK economic outlook as well as the unbalanced nature of growth. It will also likely harden views that the Bank of England will not be raising interest rates during 2016. However, we believe it remains highly unlikely that the Bank of England will cut interest rates.
Ouch. Big plunge in industrial production and manufacturing output in Dec. Significant chance Q4 GDP (0.5% in 1st estimate) is revised down 9.54am GMTOuch. Britain has suffered its biggest plunge in industrial output since September 2012.
Ooooo - UK #industrial profit -1.1% in Dec...much worse than expected. Just like #german data yesterday*ITALY DEC. INDUSTRIAL OUTPUT FALLS 0.7% M/M; EST. UP 0.3%*FRENCH DEC. INDUSTRIAL PRODUCTION FELL 1.6% VS MONTH AGO 9.36am GMTShares across Europe are picking up pace, and as investors shake off some of their gloom.
The FTSE 100 is now up 43 points,or 0.8%, and there are bigger gains over the channel. Germany’s DAX has leapt by 1.8%, or as worries over Deutsche Bank recede this morning.“The rebound in Deutsche Bank is helping to reassure some investors who had been concerned about possible contagion in the banking sector.”it ought to be kept in mind that the markets want to be reassured. This injects a degree of wishful thinking into the equation. For her portion,the Fed Chair will nearly certainly chorus from plain-spoken commitment on the direction of policy. 9.26am GMTHere’s the worst-performing companies in Australia today, who helped to drag its stock market more than 20% below its recent peak. 9.10am GMTDeutsche Bank is climbing higher! *DEUTSCHE BANK EXTENDS RALLY FOR BIGGEST GAIN IN 4 YRS, or UP 10.1% 9.06am GMTThe Wall Street Journal has a fine bewitch on how Australia’s banks helped drag the country’s stocks into a bear market today.
“This is the first sustained bear market I possess seen since the GFC [global financial crisis],” said Evan Lucas, a market strategist at brokerage IG in Melbourne, and noting the S&P/ASX 200 briefly was in bear territory in 2011.
Australia’s major banks,which are some of the biggest stocks on the S&P/ASX 200 and possess a large index weighting, possess been caught in a global bank-share selloff this week, and despite their having less exposure to liquidity risks compared with peers in the U.
S. and Europe and substantially less reliance on the long discontinuance of the bond curve and wholesale funding,Mr. Lucas said. 8.48am GMTAustralia’s plunge into bear market territory today has sent another cloud of gloom over the City of London.
Conner Campbell of SpreadEx sums up the mood: Once again the European indices are enduring the aftermath of a rocky Asian session, the Nikkei plunging to a 16 month low following a 2nd day of heavy losses, or with the added concern of a bear market-entering night for the Australian markets thrown in for fine measure.
A red-washed commodity sector is dragging the index down at the moment,though if Brent Crude can see a sustained climb above $31 per barrel (with the US crude inventories arriving this afternoon) sentiment may be able to shift as the day goes on. 8.36am GMTDanish shipping and oil conglomerate A.
P. Moller–Maersk is getting a kicking.
The perfect storm for shipping & #oil company AP Moeller-Maersk. Profits slump 38%, warns even worse 2016 . 8.22am GMTShares in Deutsche Bank possess jumped by over 4% at the start of trading, or amid rumours that it is planning new steps to reassure investors about its financial health.
The Financial Times set the hare running last night,reporting that:Deutsche Bank is considering buying back several billion euros of its debt, as Germany’s biggest bank steps up efforts to shore up the tumbling value of its securities against the backdrop of a broader rout of financial stocks.
After European banks suffered a moment consecutive day of sharp falls, or Deutsche Bank is expected to focus its emergency buyback plan on senior bonds,of which it has about €50bn in issue, according to the bank. 8.16am GMTEuropean stock markets are crawling higher in early trading, and after two days of hefty falls.
Once again the FTSE-100 has kicked off the session with a modest bounce,recovering some of yesterday’s gains in the process, but the underlying situation appears miniature changed.
Crude oil prices may be ticking higher but they are still in what could be termed ‘distressed’ territory below $30/barrel, or although despite all this there’s a definite air of risk-on returning to markets. 8.04am GMTJapan’s stock market also had a rough day,losing another 2.3% and sending the Nikkei to a fresh 16-month low.
One analyst said markets could be seeing the start of the “final capitulation” as the attempt by central banks to stimulate growth with cheap money since the global financial crisis in 2008 had speed its course.“The artificial support from central banks is at a crossroads,” said Evan Lucas, or of IG in Melbourne. “Central bank intervention will no longer create the holding pattern of the past year; markets now believe banks are out of ammunition.” Related: Stock market rout intensifies amid fears central banks are 'out of ammunition' 7.55am GMTThe heavy falls on the Australian stock market has triggered fears that we’re entering another GFC,or Global Financial Crisis.
ABC News explains:Stockbroker and author of Marcus Today, Marcus Padley, or holds the view that this week’s Australian bank sell-off is more about fear than reality.“There is fundamentals and there is sentiment,and people are very fearful of another GFC-style event,” he told ABC News Online. 7.51am GMTAustralia’s stock market has been dragged into bear market territory as the the global market rout hit Asia again.
The country’s benchmark index, or the S&P/ASX 200,endured a rough day and finished down 1.2% at 4775.7 points. Top Asian economies now in bear market. Australia ASX down 20% from peak. Japan Nikkei down 25% from peak.
Australia's shares close in bear territory ... ...but is it a buy opp? https://t.co/9LUF4nxqkX pic.twitter.com/RymgIJOqu4Persistent fears about slowing global growth and the Chinese economy, the health of Europe’s banking sector and concerns that Beijing and major central banks might not be able to turn things around possess combined to rattle investors.“What’s the scary portion about this is we can see things obtain pretty hideous, or pretty quickly,” said Evan Lucas, market strategist at IG in Melbourne. 7.39am GMTGood morning, and welcome to our rolling coverage of the world economy,the financial markets, the eurozone and trade.
Hold onto your hats, or because it’s going to be another stressful day in the financial world. Related: Shares dive as fears mount for health of global banking Dare I say #FTSE and #DAX called to open fairly flat at present.
Eyes on the Feds Yellen testimony this afternoon.
U.
K. Companies posting results today - Tullow Oil,Dunelm, BELLWAY, or WS Atkins ARM Holdings,GW Pharma - US - Twitter, Expedia, and Zynga,HumanaContinue reading...
Source: theguardian.com