The US NFIB small-business confidence index edged higher to 105.9 for February from 105.8 previously while there was a stronger than expected reading for producer prices with a 0.6% monthly gain.
In her prepared comments to the Senate Banking Committee, Fed Chair Yellen reiterated that it was dangerous to wait too long before raising interest rates given the risk that disruptive interest rates could then be required which could push the economy into recession.
According to Yellen, the FOMC expects the labour market to strengthen further with inflation rising gradually towards 2%.
Overall, she expected further gradual interest rates to be warranted and that the committee will evaluate whether further adjustment of the Fed Funds rate is needed at forthcoming meetings.
The comments were seen as relatively hawkish with no move to rule out a March hike with Yellen stating that all meetings are live.
Futures markets moved to price in around a 35% chance of three rate hikes for 2017 from just below 30% ahead of the testimony.
The dollar gained ground with the Euro dipping to five-week lows in the 1.0570 area and the US currency held firm on Wednesday.
Related Insights
Daily Brief – Forgiven
Charles Porter
Tue 10 Mar 2026
Forgiven Even with an equity correction underway at the start of yesterday’s session, it still appeared that the market was under-pricing the risk of a protracted conflict in the Middle East. FX and fixed income asset classes had reacted more severely with stronger defensive bids into currencies including the Dollar and Franc, but still the […]
Daily Brief – Fade America
Charles Porter
Thu 26 Feb 2026
Fade America There have been times during Trump’s second term that have had markets and financial commentators alike calling for an era of ‘sell-America’. Sell-America is the notion describing a scenario in which investor sentiment sours towards the US so much so that valuations across US assets decline. This is a unique scenario because many […]
Daily Brief – Sell first, question later
Charles Porter
Thu 5 Mar 2026
Sell first, question later The jury is still out on whether the initial “sell everything” reaction to a sudden increase in geopolitical risk has concluded. Certainly, some volatility remains which serves as an indication that trading conditions have not calmed whilst markets continue to question how this chapter of US military intervention ends. Emerging markets […]
