Yellen said little about the prospects of a June hike and even less about the balance sheet.
Nevertheless, she shed light on the Fed’s thinking and the importance of financial conditions.
Financial conditions have eased since the Dec. 16 and March 17 rate hikes.
Barring a premature tightening of conditions, we expect the Fed to hike in June.
Yellen’s talk after the North American markets closed was revealing even though she added little to the market’s body of knowledge about the prospects for a June hike or the issues surrounding the balance sheet. That said, she did nothing to dissuade the market from leaning toward a June hike, which through the Fed funds futures strip estimates near 63%.