Yesterday, from Australia, Westpac Consumer Sentiment figures were released. The Westpac Melbourne Institute Index of Consumer Sentiment rose by 4.2% in February to 101.3 from 97.3 in January. The Index has now recovered all the ground it lost in January when it fell by 3.5%. The Index has now returned to a level (above 100) where optimists outnumber pessimists. This is good news in that there have only been five months over the last two years when we have had optimists in the ascendency. While the plunge in the oil price is disturbing from a market perspective, households are now benefitting from lower petrol prices. Since the survey in January “average pump price” has fallen by 8.5% providing households with a decent boost to disposable incomes.
Focus of the US part of the session was on Janet Yellen's testimony. Chair Janet Yellen said the Federal Reserve still expects to raise
interest rates gradually while making it clear that continued market turmoil could throw the
central bank off course from the multiple increases that policy makers have forecast for 2016. “
Financial conditions in the United States have recently become less supportive of growth,” Yellen said in testimony prepared for delivery Wednesday before the House Financial Services Committee in Washington.
“These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market.” With her testimony on Wednesday, Yellen joined Vice Chairman Stanley Fischer and other senior Fed officials in declaring it’s too soon to tell whether sharp drops in stocks, oil prices and some bond yields represent passing volatility or reflect worsening global economic fundamentals that will dampen growth and inflation in the U.S. “The FOMC anticipates that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate,” Yellen said, repeating language from the committee’s January statement almost verbatim.
There will be no major dana releases from Australia tomorrow. In the US session Janet Yellen is due to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee, in Washington DC. Also, Unemployment Claims figures are scheduled for a release. Analysts are predicting increase to 287,000.
Figures to watch:
Unemployment Claims (Wednesday 14:30)
Fed Chair Yellen Testifies (Thursday 16:00)
