Quick one today.
Chair of the Federal Reserve Board of the USA, Janet Yellen, gave a much-anticipated prepared speech at the annual economic symposium of central bankers in Jackson Hole, WY.
Her comments were initially interpreted as "hawkish" or leaning more on the side of raising rates with such comments as:
So all of those comments could be seen as positive for the US economy and arguably somewhat negative for bonds, in general, and other risk assets like stocks as it would seem the Fed would start a rate hike program, or at least continue the one they started 9 months ago.
However,I noted one odd statement. If she/they think the US economy is so strong and they are about to raise rates, why on earth did she also say:
As I said on BNN last week, "the Fed has been dead wrong and largely spend their time attempting to jawbone the market so they don't create bubbles in stocks, bonds and other asset classes".
The result in the market was arguably the opposite of what the bulk of her speech was all about....more hawkish than anything else -- the US$ got smacked down and when the US$ moves weaker, like today, then assets that are priced in US$ move higher (you can buy more of them with a weaker US$).
So pretty much everything went up. Probably fair to say the Fed is trapped in a box here. I still maintain they talk a big game about how strong the economy is but the reality is that they are scared spit-less about deflation and raising rates prematurely and creating one nasty recession.