Investors Look to Yellen for Possible End of Jobless Target

Federal Reserve Hearing
Tom Williams/CQ Roll Call via Getty ImagesFederal Reserve Chair Janet Yellen
By Kate Gibson

The Federal Open Market Committee later Wednesday concludes its two-day policy-setting session, and is widely expected to continue its current path of tapering while holding its benchmark interest rate near zero.

The fireworks, if there are any, should come 30 minutes after the release of the FOMC decision, at the afternoon news conference, Janet Yellen's first press conference as Fed chair.

"There are a number of things we're going to be looking for in the press release, but more importantly in the news conference after; this is a new Fed chair person," said Paul Mangus, managing director of equity research and strategy at Wells Fargo Wealth Management.

The FOMC, which has held the benchmark interest rate at near zero since late 2008, is expected to continue that policy for an extended period while tapering its monthly asset purchases another $10 billion, to $55 billion.

But Yellen could signal a change in the threshold that the Fed has said would mark when it would start considering hiking the main interest rate from near zero.

Yellen could indicate "a broader range of economic indicators is being discussed, such as underemployment, the labor participation rate and inflation,
rather than focusing strictly on unemployment, currently at 6.7 percent, and the target at 6.5 percent. We're very close to that," said Mangus.

"I think the market could look at that in a positive way if it [the Fed] was looking at a broader range, since there are a lot of areas of the economy that are still recovering," Mangus added.

"Not that she is going to light it up with her comments, but it may signal a different way of delivering the Fed's message, so for that we are very interested," Kevin Giddis, head of fixed income capital markets at Raymond James, said in emailed comments.

The central bank's decision-making seems "pretty straightforward, no moves on rates and the continuation of the reduction of stimulus," noted Giddis.

"We don't want to hear that they are not doing it, primarily because we need to get out of this painted corner," Chip Cobb, portfolio manager at BMT Asset Management, said of the Fed's tapering program.

"We want to hear at least that the economy is headed in the right direction; we don't want to hear the Fed is more concerned than the last meeting," Cobb said.

Yellen "seems to be the fairy godmother of the bull market because stock prices tend to rise on days that she speaks publicly about the economy and monetary policy," noted Ed Yardeni, chief investment strategist at Yardeni Research.

"I doubt she will say anything unexpected to rattle the market but after two consecutive days of big gains, 'a sell on the news' might be a scenario that could play out," offered Elliot Spar, market strategist at Stifel, Nicolaus & Co.

"By the way, I hate predicting the market on a Fed day," Spar added.

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Typical of this administration. Unable to "fix" something (like the unemployment rate) they simply choose to claim it is irrelevant, and stop reporting on it as an accurate measure of their incompetence.

March 19 2014 at 11:43 AM Report abuse rate up rate down Reply
Tom Harrell

Is all of this gonna create "JOBS" for the American people ? ? ?

That is the Single Most Important thing the FED and the Governments
"Of the People" should be concerned with.

All the rest is "Smoke and Mirrors and VOODOO Economics"

March 19 2014 at 8:13 AM Report abuse rate up rate down Reply

The unemployment rate is NOT 6.7%. Thanks to this administration with it's regulations and obamacare it's more in the teens. The government does NOT count those folks whose benefits have run out. Only those that are still collecting!

March 19 2014 at 6:38 AM Report abuse rate up rate down Reply

What a JOKE. Investors looking to the Fed. The investors and traders ARE THE PROBLEM. Why do you think energy prices have caused everything we need to skyrocket while wages have remained STAGNANT? It does not take a rocket scientist to KNOW that if the masses HAD ANY MONEY, they would spend it for goods and services, which would spur more and more jobs to meet the demand. the 1% have reached the point of no return and are so isolated from the real world, they don't even know it. I could sit here and mention a dozen companies, hedge funds and private equity funds that HAVE SCREWED THEMSELVES.

March 19 2014 at 6:37 AM Report abuse +2 rate up rate down Reply