Waiting On Yellen

Investors are fed up with market confusion. Will a lecture today by the Fed chair provide any clarity?

Trading in Wednesday’s market was dull, and stocks and bonds volumes were both light. Investors are clearly fed up with confusion in the markets and sitting on the sidelines. Fed chair Janet Yellen has played a major role in the angst in the markets, and she will have an opportunity after today’s close to adjust her message.

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Since Yellen spoke one week ago, there has been a sell-off in the global markets and the Dow is likely down 600 points or more. She knows she needs to send a clear message; her ramblings of last week just won’t do. Yellen watches the markets, and she will likely want to clarify her stand if she knows what that is.

Today, Yellen is delivering a lecture for the Department of Economics at the University of Massachusetts Amherst (watch a live stream at www.umass.edu/yellen). As it is a lecture, there will be no Q&A and she doesn’t necessarily have to address current policy decisions. That would be the worst possible outcome of her speech. This market is looking for some sign the Fed has a clue.

Unfortunately, Yellen speaks at 5 p.m. after the close today. That sets the markets up for another uncertain day and yet another day of waiting on Yellen.

Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.

September 24, 2015

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