Janet Yellen’s Jackson Hole Speech Doesn’t Guarantee Anything

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“I believe the case for an increase in the federal funds rate has strengthened in recent months.”

This quote appeared in more stories over the weekend than perhaps any other. Maybe not your front page news headlines, but when Janet Yellen takes a rather aggressive stance on the likelihood of raising The Fed’s interest rate in the next few months, everyone in the financial world takes note. And this is about as unequivocal a statement as we can imagine.

Of course, the chairman could also immediately change direction mid stream, as she seemed to do during her speech at the Jackson Hole Economic Symposium. Almost as soon as she made her near-declaration regarding the Federal interest rate and its fate, she concluded that data must be analyzed first.

We get it: Yellen and the board are at the top of the economic world, and they don’t make decisions without evidence. Still, the sentiment came across as wishy-washy as Chip Kelly answering questions about his quarterback for the 2016 season. Which is to say that Yellen is emphasizing as strongly as possible that she is fully prepared to press the button…while simultaneously giving The Fed the leeway to keep rates steady.

And indeed, rates remain steady. As we alluded to last week, the current period of nearly two months without spike in either direction is record-setting in terms of length. And the same trend seems to be in effect as of today. Sure, the rates offered by lenders rose a tad earlier this week as slight reaction to Yellen’s comments, however most had settled back into the 3.375-3.5 percent range by Wednesday.

Here’s some data that might make a bigger impact than mere words: Friday, September 2 will bring a new jobs report, which may be just the news The Fed needs to start leaning “rise” rapidly. We shall see. If that makes you nervous, might as well lock in now.

“I still favor locking loans within 30 days of closing, pricing is great now, don’t see that much potential for significant short term gains,” says Ted Rood, a senior originator for MB Financial Bank. “If you float into Thursday, discuss NFP’s potential impact with your loan officer, then Friday will be too late.”

For now, big gains in the bond markets are making things look alright.