Yellen's Speech Preview

Yellen's Speech Preview

The increase in market volatility in recent economic data, combined with the wererocking, is sure to be the Center and fore front in talks when Governor Janet Yellenspeaks in front of the House Financial Services Committee. In the meantime, we need to look at the Treasury market's inflation estimate of 10 years which has been falling over recent years, down to the lowest level since the great recession that hit thelandscape macro at the beginning of 2009.

Rising concern about deflation, in other words, is on the agenda with a high Yellenarrived on Capitol Hill these days. The yield spread for a letter with a nominal 10-yearinflation index counterpart reduced down below 1.20 in midday trading, on TuesdayJanuary 18 – the lowest in seven years. This decrease is one of several factors thatraise new questions about the kebijaksanan of the increase in the interest rate the Fedas much as 25 basis points in December--the first round of monetary tightening since 2006.

Mohamen El-Erian, Chief Economic Adviser of the financial services company Allinz, wrote on Tuesday that Yellen has to be offensive about the risk of deflation in the evening – if this is now the key risks of the u.s. economy? "The possibility of higherwage growth showed a rise of inflation," he gave notes on the day yesterday. "But there are also other forces that push towards the others, including the fall of oil pricesfurther over the next few months, which have extended the trend of deflation in Europe in particular."

The Treasury market is likely to see these risks are rising. What does this mean for thefuture of the Fed policy? For short people betting that likely neared zero to hikeinterest rate policy at a meeting next month, according to the CME.

Whether it is a temporary affair or an early signal that the Fed will have to reverse the plan Netanyahu slightly until the next notification? All eyes and ears will be fixed toYellen at night to search for answers