WHY ARE YOU DOING THIS TO ME?
J-Yells isn’t gonna sugarcoat things: The macroeconomic world doesn’t seem to care that the Fed had painstakingly laid out how this whole thing would go, and is being irritatingly petulant right now.
The problem right now is that absolutely nothing is cooperating. Even the market’s rally on Wednesday morning is mainly aligned against her: traders are betting she’ll back off the tightening noose….
The market is already betting, heavily, that the Fed will back off its implied course of raising rates four time this year. Now, traders will want to hear Ms. Yellen say it.
“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,” Ms. Yellen said. “These developments, if they persist, 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….”
She also defended the Fed’s decision to begin lifting its benchmark rate from near zero in December, saying low rates continue to stimulate growth and waiting too long to lift them might have led to an “abrupt tightening” that “could increase the risk of pushing the economy into recession.”
The World vs. Janet Yellen [WSJ MoneyBeat blog]
Yellen Flags Risks to Economic Outlook That Could Delay Rate Increases [WSJ]