Since Chair Yellen is testifying before the House Financial Services Committee this morning and is essentially giving the same message that she did yesterday before the Senate, it’s probably a good idea readdress her address. Over the last few years, she has mostly focused on the constraints currently keeping interest rates lower, and the disadvantages associated with raising prematurely. That tone today has been changed to focus on the benefits of raising interest rates sooner rather than continuing to wait. Ms. Yellen re-affirmed the Fed’s three-hike plan in the year 2017. Fed Fund Futures place a 30% chance of a rate hike in March, a 50% chance in May, and a 100% chance for June. Aside from raising short term rates, the Fed will also allow long term rates to rise by phasing out their current repurchase plan after enacting the three bumps–especially in mortgages holdings–by allowing their current $4.5T balance sheet to taper down significantly next year. If you are on an ARM, you’d better have a pretty solid exit strategy.