Sound Bite Time
Yellen’s prepared speech is out. I think everyone had the exact same reaction
- EM – hear no evil, see no evil, speak no evil
- Taper – 3, 2, 1, ready or not, here I come
- Economy – good, though jobs could be better so ignore any 6.5% target
Treasuries are selling off on some combination of growth predictions out of the Fed (they have typically been overly optimistic) and concerns about more tapering (reading between the lines, this Fed is trying to gracefully cut back on that policy).
Stocks are okay so far, but it is a long day and I think that the lack of growth will weigh on the market, and higher rates is not good.
Anyways, we now move into the sound bite phase where politicians ask seemingly disconnected questions all in the hopes that one of their aids gave them the right sound bite to look good on at least their local news if not the national news.
We will get a better sense of what Congress is thinking about the Fed from all this (we actually learn more about the government than we do about the Fed lately at these testimonies). Look for more people to question Fed policies, putting further pressure on the markets.
Now back to the carry trade.
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