They weakened a bit during Ms Yellen’s remarks, but rose further as investors concluded that the Fed will not raise interest rates again until it is certain higher rates will not stall the economy.
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On the session, the Dow Jones Industrial Average gained 113 points, or 0.64% to 17920.
THE Australian dollar has rallied as the greenback continues to be pounded on reduced odds of a near-term United States rate rise.
Nasdaq 100 e-minis were up 7 points, or 0.16 percent, on volume of 14,340 contracts.
Despite this, the Fed chair appeared upbeat with her forecasts for the U.S. economy, and warned against attaching “too much significance” to a report which suggests only 38,000 jobs had been created last month – 122,000 fewer roles than had been forecast.
Michael Gapen, chief USA economist at Barclays, said Yellen’s “lack of specificity on timing keeps the door open for a July rate increase”, but he believes September is more likely. Following the bad job numbers last Friday, where 38,000 jobs showed up instead of the 164,000 expected, it was thought the June or July rate rise could be delayed to September and that one rise for the year looked like the limit. “The economic projections that accompany the June FOMC meeting will likely contain the most important information with regard to Fed thinking for the next month”, said Jay Morelock, an economist at FTN Financial. Wage growth also slowed down, the labor participation rate fell and indicators of employee confidence also were weaker.
According to the Wall Street Journal, Yellen’s speech suggested “the Fed’s intention to gradually raise interest rates remains on track”, Alan Gayle, director of asset allocation at RidgeWorth Investments, which manages 37 billion dollars, said.
Other than the jobs reports, a June 23 vote by the United Kingdom to leave the European Union – something that, if it were to happen, many economists believe would hurt the global economy – play into the Fed’s decision to raise rates, Yellen said.
World equity markets were higher, and MSCI’s all-country world equity index rose 0.53 percent for a third straight gaining session to a six-week high on Monday.
Analysts said Yellen’s speech was largely in line with expectations. “What is certain is that monetary policy is not on a preset course, and that the Committee will respond to new data and reassess risks so as to best achieve our goals”.
It was also buying 51 British pence, 64.9 Euro cents, 79.3 Japanese yen and $NZ1.06.
The pound was 0.4 percent lower at $1.4456 after falling in Asian trade to $1.4352, its lowest since May 16. As bond prices fell, the yield on the 10-year U.S. Treasury note rose to 1.73 percent from 1.70 percent.
Most economists say they think the Fed will keep rates unchanged next week in light of the jobs report. USA produced crude was up $1.05, or 2.2%, to $49.67, once again closing in on the key $50 per barrel mark. Brent crude, which is used to price worldwide oils, gained $1.18, or 2.4 percent, to $50.83 a barrel in London.
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Goldman was up 1 percent, while JPMorgan gained 0.8 percent.
