US: Yellen to remain in focus today - BBH

Federal Reserve Chair Yellen will deliver the semiannual testimony before Congress next week and her prepared remarks will be made available, which are likely to garner maximum attention after the release of NFP data, according to the research team at BBH.  

Key Quotes

“These will likely be a broad overview of the economy, which is expanding a rate near where the Fed assesses is near-trend.  This side of the financial crisis, the slower growth appears to be a function of weaker labor force growth (demographics and, perhaps, other sociological factors) and weaker productivity growth.  At the same time, while the recovery may be getting long in the tooth, as they say, there does not appear to be the kind of imbalances that are corrected via market forces or policy which have been associated with the end of past business cycles.”

“Yellen and the Fed's leadership seem more determined than others to look past the near-term noise in high frequency data.  We have suggested that earlier this year, the Fed seemed to become more confident of the resilience of the economy.  As such, the Fed is committed to taking advantage of the better global conditions and easing of US financial conditions to continue normalizing policy through gradual rate increases and the beginning of the reduction of the Fed's balance sheet.”