Yellen wraps up appearance

  1. Didn't want to put the focus on a specific meeting but said hikes (plural) ahead this year as long as the economy stays on track
  2. She will complete her term, which ends in a year
  3. "I indicated that at our upcoming meetings, we will try to evaluate whether or not the economy is progressing. If so "it probably will be appropriate to raise interest rates further."
  4. She said that at the start of the year most Fed members concluded "a few" hikes appropriate this year. "Precisely when we would take an action, whether it's March, or May, or June, I know people are focused on that, I can't tell you exactly which meeting it would be. I would say that every meeting is live."
  5. The Fed balance sheet will end up "substantially smaller"

The Fed funds market is now pricing in a 34% chance of a hike. That hasn't moved up much today but May has moved to 54% from 48% and June to 74% from 71%.

Yellen promised nothing but the market thought she might be a bit more cautious in order to avoid building up hike hopes. Instead, she left the door wide open to a move (and moves) at any time.

So the rally in the US dollar is completely justified. The next question is whether (or when) her talk will be overshadowed by something in Congress or the White House.