European stocks are up Wednesday, while bonds are holding steady ahead of the semi-annual monetary policy testimony from Fed chair Janet Yellen today. The dollar is hovering near 10-month low territory also approached in late June.
“The Federal Reserve chairwoman’s semi-annual monetary policy testimony will be the main event today. We expect Janet Yellen to present a relatively upbeat outlook and continue to guide market participants toward the commencement of balance sheet normalisation as well as another rate hike by year-end,” Brett Ryan, Deutsche Bank economist was quoted by the Financial Times as saying.
“The Fed will most likely pause its rate hiking cycle at the September meeting to announce the tapering of reinvestments, which would ostensibly begin in October. If there are no meaningful dislocations in financial markets related to tapering and incoming data continue to support the Committee’s growth and inflation outlook, we expect the Fed to resume hiking at the December meeting”