Westpac isn't expecting much from Janet Yellen tomorrow


After a raft of hawkish commentary from US Fed officials in recent weeks, something that along with the release of the FOMC’s March meeting minutes has seen expectations for a near-term US rate hike grow substantially, market attention is now turning to an upcoming “discussion” with US Federal Reserve chair Janet Yellen at 3.15am Saturday AEST.

Going off the bullish price action seen in Asia so far on Friday, particularly in stocks, it suggests many investors are already anticipating a rally in risk assets to coincide with her appearance.

Although many hope that she’ll convey a similar message to other members of the FOMC about the outlook for interest rates, helping to underpin markets as a consequence, Sean Callow, senior currency strategist at Westpac, isn’t holding his breath in anticipation of the event.

He explains:

Markets would love to hear Fed chair Yellen’s views on the short term outlook for interest rates, but today’s appearance doesn’t seem promising in that regard. Yellen will receive a medal from Harvard University, including a “conversation” with Harvard professor Gregory Mankiw about Yellen’s “groundbreaking achievements.”

Clearly he’s not expecting much when it comes to the outlook for monetary policy.

Instead, he suggests markets will likely have to wait until Yellen addresses the World Affairs Council in Philadelphia on June 6 for her views on the outlook for rates.

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