Bankers' remorse
US Federal Reserve Chair, Janet Yellen attempted to “right the ship” in her first speech since the board decided not to lift US rates in September. Her re-iteration that the Fed plans to lift interest rates this year. The signalling effect of her speech is lifting risk currencies and US share market futures, suggesting the Asia Pacific zone may shrug off negative overseas leads and post gains today.
Yellen’s speech may indicate dismay from the board at the unintended consequences of last week’s no change decision and the accompanying laundry list of economic woes. No doubt intended to convey reason and transparency, they instead saw sentiment plummet and volatility increase. The immediate market responses include point to a restoration of confidence that markets can sustain through rising US rates.
CPI and PPI data released in Japan this morning may add to the positive sign, with the core CPI reading of a 0.8% gain in August beating forecasts and indicating benefits from the three arrows stimulus program. A better night for commodities, including oil, copper and gold, could see additional support for the Australian index.
Frequently Asked Questions about this Article…
Janet Yellen's recent speech indicated that the US Federal Reserve plans to lift interest rates this year, which is a move aimed at restoring market confidence and addressing the unintended consequences of their previous decision not to raise rates.
The market reacted positively to Janet Yellen's speech, with risk currencies and US share market futures experiencing a lift. This suggests that the Asia Pacific zone might also see gains, shrugging off previous negative overseas leads.
The US Federal Reserve decided not to raise interest rates in September due to a list of economic concerns. However, this decision led to a drop in market sentiment and increased volatility, which the Fed is now trying to address.
Janet Yellen's speech helped restore investor confidence by signaling the Fed's intention to raise interest rates this year, which suggests that markets can sustain through rising US rates.
Japan's recent economic data, particularly the core CPI reading of a 0.8% gain in August, exceeded forecasts and indicated positive effects from the three arrows stimulus program, contributing to a more optimistic market sentiment.
Following Janet Yellen's speech, commodities such as oil, copper, and gold showed improvement, which could provide additional support for the Australian index.
Raising interest rates could restore market confidence and stability, as it signals the Fed's confidence in the economy's ability to handle higher rates, potentially leading to more sustainable growth.
The Asia Pacific markets might respond positively to the US Federal Reserve's plans to raise interest rates, as indicated by the lift in risk currencies and US share market futures, suggesting potential gains in the region.
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