First, there are rumors that the text of Yellen’s opening statement could be released today — likely sometime in the next two hours.
Expect the market to be hypersensitive to any statement and likely to overreact. Unless something she says is truly game changing, it’s probably best to fade the move (Praet style).
Yellen pledging to print the US dollar to worthlessness
In the Q&A tomorrow, watch for how Yellen handles the pressure.
She’s famous for preparation and meticulousness but doesn’t like to improvise. At Thursday’s confirmation hearing she might not have a choice. Public and Congressional skepticism of the Fed is high and politicians will be looking to score easy points.
On monetary policy, she is likely to repeat the well-scripted Fed refrain on data-driven analysis. I imagine she will be more prepared for this event than anything in her career so if she shows any difficulty in sticking to the script when Congress turns up the heat it’s a worrisome sign for the months and years ahead.
On the nuts and bolts of what’s expected from Yellen, PIMCO’s Mohamed El-Erian has a preview.