What Janet Yellen's testimony on Wednesday means for the market

Federal Reserve Chair Janet Yellen is set to testify on the economy before the Joint Economic Committee on Wednesday, and foreign exchange strategists are watching her remarks for their implications across asset classes.

Boris Schlossberg of BK Asset Management believes that even though Yellen's tenure as chair is coming to a close, her testimony on the outlook for 2018 will still carry weight in the market, and her comments have the potential to prove quite bullish. Here are Schlossberg's reasons.

• Yellen is underrated as one of the best economic forecasters. Should she provide a confident guide for next year, equity, bond and currency markets would collectively see a boost.

• Yellen's remarks on inflation, specifically, will be of particular interest to the market. Given the muted nature of various measures of inflation this year (gauged by consumer price index or personal consumption expenditures), her view for inflation will be the key feature to watch.

• The market will be paying close attention to Yellen's outlook on regulation, especially after her designated successor, Federal Reserve Governor Jerome Powell, told a Senate committee Tuesday that he favors stringent regulation for larger financial institutions and less so for smaller banks.

• If Yellen expresses strong confidence that the Fed is going to tighten further, the U.S. 10-year yield could move up to 2.45 percent and the dollar/Japanese yen could see a move up to the 112.0 mark.

Bottom line: Even as her tenure comes to a close, Federal Reserve Chair Janet Yellen's congressional testimony on Wednesday could have wide-reaching implications for different markets.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more