Yesterday, Janet Yellen said that the economy was strong enough to warrant the “winding down” of its 4.6 trillion dollar balance sheet. The Fed’s neutral policy and mild enough inflation seem to make everyone happy. Investors and traders just shrugged their shoulders and went back to work, resulting in stocks and bonds both positive trading sessions yesterday. Ms. Yellen addresses the Senate today: no reaction yet.
The Producer Price Index released this morning was weaker than expectations, dropping from 2.1% to 1.9% annual growth. Stocks are up and Bonds are down, both only moderately.