Gold hit a three-month high and global shares rose on Tuesday as investors wagered that the new head of the U.S. Federal Reserve would renew the bank's pledge to keep policy ultra-easy at her first testimony to Congress.
Fed Chair Janet Yellen is likely to face questions on the state of the labour market and the future pace of tapering when she appears before the House Financial Services Committee at 1500 GMT. Her testimony will be released at 1330 GMT.
Dealers said the latest betting was that while the tone was likely to be upbeat on the economy, Yellen would emphasise that interest rates were set to remain near zero for some time.
Analysts have generally assumed Yellen will stick with the script and reiterate that the Fed will continue to scale back its asset buying as long as the economy improves as expected.
"In the absence of a Fed meeting in February, her testimonies are seen as the biggest risk event for the month."
One argument for staying the course on tapering is that bond investors have learned to live with the idea after fears that interest rates would rise led to bouts of selling last year.
Yields on U.S. 10-year Treasury paperhave settled back at 2.67 percent, well below recent highs of 3.04 percent and less of a threat to the housing market.
Investors, too, have accepted that tapering is not the same as tightening and have pushed out the timing of the first actual hike in the Fed funds rate. A move is not fully priced in until late 2015 <0#FF:>, a view Yellen is likely to endorse.
Source: Reuters
Fed Chair Janet Yellen is likely to face questions on the state of the labour market and the future pace of tapering when she appears before the House Financial Services Committee at 1500 GMT. Her testimony will be released at 1330 GMT.
Dealers said the latest betting was that while the tone was likely to be upbeat on the economy, Yellen would emphasise that interest rates were set to remain near zero for some time.
Analysts have generally assumed Yellen will stick with the script and reiterate that the Fed will continue to scale back its asset buying as long as the economy improves as expected.
"In the absence of a Fed meeting in February, her testimonies are seen as the biggest risk event for the month."
One argument for staying the course on tapering is that bond investors have learned to live with the idea after fears that interest rates would rise led to bouts of selling last year.
Yields on U.S. 10-year Treasury paper
Investors, too, have accepted that tapering is not the same as tightening and have pushed out the timing of the first actual hike in the Fed funds rate. A move is not fully priced in until late 2015 <0#FF:>, a view Yellen is likely to endorse.
