Yellen Boosts Financial Reforms, Stays Mum on Monetary Policy


The chair of the Federal Reserve forcefully defended the post-crisis regulatory regime Friday - a rejection of President Donald Trump's assertions that financial regulations need to be dramatically scaled back.

"The events of the crisis demanded action, needed reforms were implemented, and these reforms have made the system safer", she said in prepared remarks.

Oil majors Exxon and Chevron rose about 1 percent, helped by a rise in oil prices as the industry braces for Hurricane Harvey, which may become the biggest storm to hit the U.S. mainland in more than a decade.

In his speech, Draghi did not address the financial health of the eurozone, which includes the 19 nations that share the euro currency. Against the euro, it held close to the low of 92.37 pence reached on Wednesday, a level it last tested in October 2016.

"It's hard to really see Cohn being drastically different from where the dot plot is today - if anything, maybe it's a little lower,"' said Scott DiMaggio, who helps oversee $290 billion as director of global fixed-income at AllianceBernstein. And of course, Wall Street continued its bullish its progression.

President Trump will have a chance to move the Federal Reserve toward economic growth instead of stultifying regulation and quantitative easing.

The pound sterling also rounded convincingly on the greenback, with the GBP/USD exchange rate adding 70 points to be reach 1.2882.

Overall, the Fed chair said, 'any adjustment to the regulatory framework should be modest and preserve the increase in resilience' in a financial system she said is now better able to weather future shocks.

While there was some contradictory evidence as to whether the reforms were hindering economic activity, she pointed to assessments which found "sizable net benefits to economic growth from higher capital standards". Later in the session, Draghi said recoveries taking place in global economies are firming, though he said it was "at an earlier stage" in Europe and Japan. I am not receiving compensation for it (other than from Seeking Alpha).

The second reason why Trump should keep Yellen is because any change in the Fed chairmanship, even if her successor is widely viewed as positive for the markets, is an uncertainty for investors. The Fed has hiked interest rates twice this year, but she has been cautious about the central bank's path to normalisation.

"Traders dumped the US dollar after Yellen failed to discuss monetary policy", said market analyst David Madden at CMC Markets UK.

Focus on the European Central Bank (ECB) is also expected, awaiting the manufacturing PMI numbers, alongside euro area surveys on business and consumer sentiment as well as inflation figures.

The telecom, industrials, and energy sectors were the leaders, with gains of more than 0.5 percent.

While some observers say Trump still could reappoint Yellen in 2018 due to the perceived chaos in his administration and the standoff with and within Congress, such a reappointment is deemed unlikely from the policy viewpoint. At the 2013 Jackson Hole conference, the White House had already winnowed the choice down to Yellen or Larry Summers, a former Treasury secretary.