Janet Yellen just released her testimony
ahead of her confirmation hearings tomorrow.
Gold and stocks are spiking on the news. The Dollar is slipping.
So did she say anything super dovish? Far from it. She literally made new real news at all. It’s all throat clearing for tomorrow’s Q&A, which will hopefully be interesting.
So what explains the market move.
Here’s the only explanation: People were expecting that she might throw a bone to the hawks — that she might talk up her concern about not letting inflation go wild.
But she didn’t. And she’s smart to. In a world where forward guidance is the dominant force in monetary policy, every word she says arguably matters. And beyond that her confirmation is in the bag. No need to pander.
That’s the only explanation that makes sense.