Fed Chair Yellen's prepared remarks were long on regulation
Fed Chair Yellen's prepared remarks were long on regulation and short on policy insights. The only comment on policy was to say that substantial progress has been made on maximum employment and price stability, and that came near the end of her prepared text. She fully defended regulatory reforms. She worried about risks of excessive optimism and leverage. She added "market-based measure may not reflect true risks -- they certainly did not in the mid-2000s -- and hence the observed improvements should not be overemphasized. But, she seemed hopeful that if the lessons, albeit painful, of the past are kept in mind, the "financial system and the economy will experience fewer crises and recover from any futures crisis more quickly." With no fresh updates on policy, the markets will likely continue to price in balance sheet normalization ahead, while holding off on rate hikes this year.