Bernanke's Humphrey-Hawkins Testimony Could Signal Important Shift
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This week, Fed watchers (which should be anyone with a penny in the market) will be focusing in on Fed Chairman Ben Bernanke's Humphrey-Hawkins testimony. Mr. Bernanke will testify before the House Financial Services Committee on Wednesday at 10:00am and before the Senate Banking Committee on Thursday at 10:30am.
While any comments from the Fed Chairman can potentially be market moving, comments made before Congress this week could be especially important given the uncertainly surrounding the timing of QE tapering amid the sharp contrast between more hawkish comments he made following the June FOMC statement and his more recent dovish comments that sparked a stock market rally.
In addition to the actual tone of the testimony, it could be very symbolically important as it could be Mr. Bernanke last one before he retires as Fed Chairman.
"We expect the chatter surrounding Bernanke's replacement to grow louder following his testimony later this week and for an announcement to be made by the end of August", Compass Points' Isaac Boltansky said.
On the positive side for market bulls, even if Mr. Bernanke retires his replacement could be more dovish than he is. "We continue to believe that Fed Vice Chair Janet Yellen remains the likeliest pick to succeed Bernanke," Boltansky said.
That said, is an ultra dovish Fed Chairman what the market needs to continue to climb higher? Some would argue that a miscalculation on a Fed exit could have catastrophic ramifications and bring with it runaway inflation. Others would argue that in order to avoid a Japan 2.0, the Fed needs to continue to be as easy as possible.
While any comments from the Fed Chairman can potentially be market moving, comments made before Congress this week could be especially important given the uncertainly surrounding the timing of QE tapering amid the sharp contrast between more hawkish comments he made following the June FOMC statement and his more recent dovish comments that sparked a stock market rally.
In addition to the actual tone of the testimony, it could be very symbolically important as it could be Mr. Bernanke last one before he retires as Fed Chairman.
"We expect the chatter surrounding Bernanke's replacement to grow louder following his testimony later this week and for an announcement to be made by the end of August", Compass Points' Isaac Boltansky said.
On the positive side for market bulls, even if Mr. Bernanke retires his replacement could be more dovish than he is. "We continue to believe that Fed Vice Chair Janet Yellen remains the likeliest pick to succeed Bernanke," Boltansky said.
That said, is an ultra dovish Fed Chairman what the market needs to continue to climb higher? Some would argue that a miscalculation on a Fed exit could have catastrophic ramifications and bring with it runaway inflation. Others would argue that in order to avoid a Japan 2.0, the Fed needs to continue to be as easy as possible.
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