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12 Feb 2014
Flash: Yellen sights an improved labour market
FXStreet (Guatemala) - Sean Callow, strategist at Westpac Banking Corporation ABN noted key points in Yellens testimony earlier in the US session of which is impacting in Asia price action.
Key Quotes:
“Fed chair Yellen’s prepared testimony was similar in tone to the January 29 FOMC statement”.
“She quoted huge chunks of the statement that we don’t need to repeat here other than in the briefest fashion”:
“will likely reduce the pace of asset purchases in further measured steps ... not on a preset course ... contingent on its outlook for the labor market”.
“On reaching the 6.5% unemployment threshold she explained “it will not automatically prompt an increase in the federal funds rate, but will instead indicate only that it had become appropriate for the Committee to consider whether the broader economic outlook would justify such an increase". Which it doesn’t yet, as we were told on Jan 29.”
“She was asked what it would take to pause the taper, she replied “a material change in our outlook for the labour market”.
“Notably, her emphasis was on cumulative gains, so the lack of acceleration in payrolls jobs growth since late 2012, with payrolls averaging 175k per month in October-January just past, compared to 210k in the same four months a year earlier, still indicates an improving labour market outlook, the chair implied, even if the more recent dynamic is slower”.
Key Quotes:
“Fed chair Yellen’s prepared testimony was similar in tone to the January 29 FOMC statement”.
“She quoted huge chunks of the statement that we don’t need to repeat here other than in the briefest fashion”:
“will likely reduce the pace of asset purchases in further measured steps ... not on a preset course ... contingent on its outlook for the labor market”.
“On reaching the 6.5% unemployment threshold she explained “it will not automatically prompt an increase in the federal funds rate, but will instead indicate only that it had become appropriate for the Committee to consider whether the broader economic outlook would justify such an increase". Which it doesn’t yet, as we were told on Jan 29.”
“She was asked what it would take to pause the taper, she replied “a material change in our outlook for the labour market”.
“Notably, her emphasis was on cumulative gains, so the lack of acceleration in payrolls jobs growth since late 2012, with payrolls averaging 175k per month in October-January just past, compared to 210k in the same four months a year earlier, still indicates an improving labour market outlook, the chair implied, even if the more recent dynamic is slower”.