Janet Yellen is currently facing her first litmus test as the Federal Reserve chair. She is answering questions from a number of US lawmakers, some of whom are openly hostile to the Federal Reserve. They are expected to grill her about her commitment to taper down the support of the Fed for the US economy.
This meeting is being closely watched by a number of financial markets around the world, who expect Yellen to set up a positive tone and point to the signs of slow and steady economic progress, despite a few hurdles down the road.
The new Federal Reserve chair is scheduled to make two public appearances, and negotiations continue to increase the approximate $17 trillion limit on United States debt, that was broken the previous Friday and avoid another shutdown of the government.
The Standard & Poor 500 index lost 3.6 percent in January and has suffered a number of extremely rocky sessions. However, the Thursday and Friday of the first week of February have seen stocks ignoring mixed corporate and economic news and gaining about 2 percent over the two days.
Earnings reports are expected this week from a number of companies like Cisco Systems (NASDAQ: CSCO), CBS (NYSE: CBS), Deere (NYSE: DE), PepsiCo (NYSE: PEP), Sprint (NYSE: S), McDonalds (NYSE: MCD), Rio Tinto (NYSE: RIO) and Whole Foods (NASDAQ: WFM). The Thursday and Friday of the second week of February will reveal a number of economic indicators like business inventories, US retail sales and jobless claims, and updates on consumer sentiment and industrial production respectively.
Claims and testimonies
Janet Yellen has consistently supported the policies of easy money undertaken by the Federal Reserve and investors will keenly look to her direction for any signals regarding the pace at which the Fed will continue to scale down its unorthodox bond buying measures. A single untoward phrase having multiple interpretations may cause chaos in the market.
Yellen’s testimony is scheduled to be released at approximately 8:30am and the hearing are scheduled to commence from 10am. She has already testified before the Senate Banking Committee, which is under the control of the Democrats.
The Federal Reserve has cut the purchase of assets two times since December, the result of the encouraging momentum of the US economy. But the weak jobs growth during the first month of the new year, a slowdown in manufacturing and the recent liquidation of assets in emerging markets have complicated things for the new Federal Reserve chair.