Published: Thu, July 13, 2017
Culture | By Kelly Harrison

DJIA Today: Dow Jones Futures Hit Record Following Yellen Testimony

DJIA Today: Dow Jones Futures Hit Record Following Yellen Testimony

The rupee today retreated from two- week high levels against the U.S. currency and ended lower by 6 paise at 64.59 on fresh bouts of dollar demand amid Fed rate hike rhetoric. "There is, for example, uncertainty about when - and how much - inflation will respond to tightening resource utilisation". Yellen raised the possibility that the Fed would consider slowing the pace of its interest rate increases if inflation remains persistently below its target level. Investors will be focused on any comments on fighting inflation in financial assets, which continues to rise despite four rate hikes since December 2015. Ben Broadbent said in an interview Wednesday that uncertainties surrounding the outlook for the British economy makes it a hard time to support an increase in borrowing rates. So an easy follow-up question for Yellen: How big will the balance sheet be when you're done trimming?

Yellen's remarks offered a fairly upbeat assessment of the American economy.

Her term ends in February.

Traders seemed somewhat reluctant to make more significant moves ahead of Yellen's congressional testimony. "Our focus has been on the safety and soundness of the operations of Deutsche in the USA", she said.

Even with the economy picking up and inflation expected to eventually move up towards the two percent target, from about 1.4 percent now, the Fed repeated its view that "the ongoing strength in the economy will warrant gradual increases in the federal funds rate". More generally, the Committee would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved exclusively by reducing the federal funds rate.

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However policymakers are wary of prompting the kind of "taper tantrum" that greeted Ms Yellen's predecessor's announcement that the Fed would cease its bond-buying programme.

The stock market recovered yesterday ahead of the speech of US Federal Reserve chairperson Janet Yellen.

The Dow Jones Industrial Average .DJI rose 0.55 points to 21,409.07, the S&P 500 .SPX lost 1.9 points, or 0.08 per cent, to 2,425.53 and the Nasdaq Composite .IXIC added 16.91 points, or 0.27 per cent, to 6,193.31. Banks are flush with cash after clearing the Federal Reserve stress tests, raising the prospect that financial giants could turn to acquisitions as a way to grow.

But Yellen's upbeat assessment of the United States economy buoyed USA stock markets.

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