While stocks did sell off a bit following the comment Wednesday, they recovered much of their losses by the end of the day. And they rallied again on Thursday as traders "reassessed" their interpretation of Yellen's remarks, in the words of one Reuters article.
The yield on the 10-year Treasury note finished up slightly on Wednesday, but that was at least as much a result of the consensus Fed guidance on rate-hike timing than it was anything Yellen said.
And what exactly did she say?
When pressed on what the Fed meant when it said it would hold rates at effectively zero for a "considerable period" after winding down quantitative easing, Yellen hesitated a bit. She clearly did not want to get pinned down. She said it was "hard to define." And then she did the unthinkable, saying it "probably means something on the order of around a six-month period or so."
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Let's grant that if she had it to do over she might take the six-month comment back (though of course we don't know for sure it wasn't an intentional move). Still, Yellen's uncomfortable body language during the exchange suggests it was unintentional.
"The 'six months' reference to timing on rate increases was a mistake," John Makin, an economist and resident scholar at the American Enterprise Institute, said in an interview. "It [was] a break from 'conditionality' that emphasize dependence on economic data—as the minutes do. She tried to qualify but I think her eagerness to please hawks and the press got the better of her."
Pantheon Macroeconomics' Ian Shepherdson agreed, saying: "I guess the pressure of the occasion got to her. Otherwise her performance was solid, she did her best to make the dove case, having been dealt a poor hand by her colleagues, nudging up their rate forecasts."
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But Yellen's comment was hardly the story of the news conference, and it did not justify coverage like the Financial Times reporting that Yellen "stumbled in her first meeting as chairwoman of the U.S. Federal Reserve after sending signals that appear to point to earlier rises in interest rate." Nor was it true that Yellen "rattled" markets or that investors "bristled" as The Wall Street Journal reported.
In fact, such coverage and headlines look fairly silly following the market gains since Yellen concluded her first news conference.