testimony before congress and we are bringing it to you live there it we are listening for any hints about her schedule for rate increases. welcome to bloomberg market day, i am pimm fox. we are standing by, waiting to hear from janet yellen. she is testifying today before the house financial services committee. this is the first part of her testimony. she would talk about her outlook for the country and offer guidance about when the bank will start raising interest rates. riccadonna, this is important because we want to know what will happen with

interest rates. guest: it will not be that important, she did not tell us anything new in the testimony .hat has been released it was a repeat of what the fed has been saying for some time. they could raise rates this year, but we do not know when. it is up to congress to drag something out of her today. julie hyman is on capitol hill to give us the highlights. dooley: i have the same information. emphasizingof free that the trajectory, the planned trajectory is that we see planned increases. she hedges as she so often does. economic conditions would likely make it appropriate to raise the federal fund rate target and normalizing the policy, however, the hedge comes, let me emphasize these are projections,

not statements of intent. into stone.carved optimism getting to the target of 2%. she says there have been transitory items that have affected inflation. there is still slack in the labor market but she and the committee are confident. the international scene, the situation in greece remains difficult and china continues to grapple with the problems it has. again, optimism. economic growth abroad could pick up more quickly then observers generally anticipated. u.s. economy may also snap back more quickly. ,he does a lot of on one hand on the other hands. i quickly went to mention, when

it comes to the hearing beginning, there are questions about a leak. ism: what we're looking at jeb hensarling, the chairman of the committee. he is the ranking republican. theas your statements from chairman and the top democrat, maxine waters. the other issue is the ongoing investigation into the leaks. julie: they have the going back and forth, hence a link is he is askingrit -- for more information about the includedote that

information. yellen said that she turned over letters. she says transparent communications reflect the accountability. emphasizing the fed has been transparent. she also notes the measures that have affected the ability of policymakers to make decisions free of short-term political pressure should be avoided. she seems to be going on the defensive here with regards to the questions she may get. also have scheduled from washington, president obama will speak in about -- at about 1 p.m. it can take from 3-5 hours. michael: i want to pick up on what julie was saying and ask her a question. janet young comes into this a bit defensive.

often members of the committee give us an idea of where they politics ofth the the day. have we heard anything about congressman waters are going to julie: we also know in recent testimony and judging from recent comments tohere is a renewed desire regulate the fed, to somehow constrain the fed in some way. you make a commentary to that effect. pimm: taking a look at market reaction, reaction because of most recentcanada's move to lower interest rates fallingof

energy prices. the dow is down about nine points, the s&p 500 unchanged and the nasdaq a quarter of a percent. let's look over the treasury markets if we can and a look at the tenure, unchanged. dollar ishow the performing. moving a little bit higher. what can we expect here about the strength of the u.s. dollar? guest: she tries to downplay the importance of the liftoff date and instead says what is more relevant is the expected path of interest rates and the economy, reflected in not only the shape of the yield curve but equity market levels and the strength of the dollar. guest: if there is a tightening of the financial conditions,

they will alter their policy. is it because of the signaling of gradual increases, it -- fedt: that is what the hopes will happen. if there is a dramatic impact, market is doing some of the heavy lifting for the fed and they can go even slower or later. i want to highlight one thing. kind of buildup expectations for the economy, but this is classic. is doing by she saying that economy could snap back faster than expected, we may have to move more quickly, she is appeasing the hawks. in her mind, she may be in the one hike camp. maybe it'll come back faster, if it doesn't, we will follow the

policy accordingly. the other focus of the hearing seems to be the governance of the federal reserve level and the leak of information. guest: in october 2012, the advices group put out and advisor about what would happen the next day. they are investigating how they got the information. they have subpoenaed the information from janet yellen who was so far refused to give it. she said that she cannot interfere with the investigation. he accused her of willfully disregarding congress. you do not want to hear that if you are a supervisor regulated by congress. pimm: we are watching maxine waters, congresswoman from california. she is getting her opening

statement, just heard from the carl, to your point, , she is giving the second half. it is going to be the exactly same thing. guest: the only opportunity for desk for newon information will be from the question-and-answer session. did youlie hyman, d find out more about what we can gekk? her to speak about julie: it is wide-ranging on a number of different issues but touches on bond market liquidity. she notes, or the committee notes, yellen is not exclusively the author, there has been expressed concern about fixing

markets. it is something that we have been talking about so much recently. fed says a variety of metrics do not suggest a deterioration in day-to-day liquidity. it may point to less resilient liquidity. it is keeping an eye on the issue. ongoing fed saying that markets could -- rates jump in long-term might amplify volatility. the fed does not see a high risk of fire sales. we now see lower leverage. we are watching this, where of, but we are not overly concerned. pimm: there are three specific

tasks, issues the federal reserve focuses on, maximum employment, stable prices, moderate long-term interest rates. is janet yellen able to come before the house and senate and say we are doing pretty good on all three? michael: yes. financial stability is what they are worried with the financial -- people were concerned about how quickly could bonds move and he gets back to what call with looking at. if yields went up to fast, everybody might try to get out. many have a problem and the fed is saying that we think we can handle that, the system is stable enough at this point.

it could be difficult to find markets if they try to sell them to quickly. pimm: it also means lending will not be a smooth. you cannot borrow against what you do not have. guest: the fed has been citing the slow thaw. the still view housing market as low. janet yellen says she needs to see a bit more evidence the economy is mending before she is able to move on rates. it comes after a lousy sales report she seems to shrug off. what is the evidence she needs ?o see gekk at a you're looking

picture of gwen moore, democrats from wisconsin. michael: at this point in a testimony, she does not give us any clues. from here out, we should probably, if they are going to as we go through august if we do not hear that, you could probably back off some of your estimates. they do not want to go into august and have what happens when ben bernanke said they might begin tapering. pimm: carl, when you listen to all the speeches and get the yous of all the speeches, must to find if they mention the word september. karl: john williams indicated he

was still in the two hike camp. he is a dove and in favor of going in september. pimm: let's go to fed chair yellen. janet yellen: chairman hensarling, ranking member waters, and members of the committee, i am pleased to present the federal reserve's semiannual monetary policy report to the congress. in my remarks today, i will discuss the current economic situation and outlook before turning to monetary policy. since my appearance before this committee in february, the economy has made further progress toward the federal reserve's objective of maximum employment, while inflation has continued to run below the level that the fomc judges to be most consistent over the longer run with the federal reserve's statutory mandate to promote maximum employment and price stability. in the labor market, the unemployment rate now stands at

5.3%, slightly below its level at the end of last year and down more than 4.5 percentage points from its 10% peak in late 2009. meanwhile, monthly gains in nonfarm payroll employment averaged about 210,000 over the first half of this year, somewhat less than the robust 260,000 average seen in 2014 but still sufficient to bring the total increase in employment since its trough to more than 12 million jobs. other measures of job market health are also trending in the right direction, with noticeable declines over the past year in the number of people suffering long-term unemployment and in the numbers working part time who would prefer full-time employment.

however, these measures, as well as the unemployment rate, to indicate that there is still some slack in labor markets. for example, too many people are not searching for a job but would likely do so if the labor market was stronger. and, although there are tentative signs that wage growth has picked up, it continues to be relatively subdued, consistent with other indicators of slack. thus, while labor market conditions have improved substantially, they are, in the fomc's judgment, not yet consistent with maximum employment. even as the labor market was improving, domestic spending and production softened notably during the first half of this year. real gross domestic product is now estimated to have been little changed in the first quarter after having risen at an average annual rate of 3.5% over the second half of last year, and industrial production has

declined a bit, on balance, since the turn of the year. while these developments bear watching, some of this sluggishness seems to be the result of transitory factors, including unusually severe winter weather, labor disruptions at west coast ports, and statistical noise. the available data suggest a moderate pace of gdp growth in the second quarter as these influences dissipate. notably, consumer spending has picked up, and sales of motor vehicles in may and june were strong, suggesting that many households have both the wherewithal and the confidence to purchase big-ticket items. in addition, homebuilding has picked up somewhat lately, although the demand for housing is still being restrained by limited

availability of mortgage loans to many potential homebuyers. business investment has been soft this year, partly reflecting the plunge in oil drilling. and net exports are being held down by weak economic growth in several of our major trading partners and the appreciation of the dollar. looking forward, prospects are favorable for further improvement in the u.s. labor market and the economy more broadly. low oil prices and ongoing employment gains should continue to bolster consumer spending, financial conditions generally remain supportive of growth, and the highly accommodative monetary policies abroad should work to strengthen global growth. in addition, some of the headwinds restraining economic growth, including the effects of dollar appreciation on net exports and the effect of lower oil prices on capital spending, should diminish over time. as a result, the fomc expects

u.s. gdp growth to strengthen over the remainder of this year and the unemployment rate to decline gradually. as always, however, there are some uncertainties in the economic outlook. foreign developments, in particular, pose some risks to u.s. growth. most notably, although the recovery in the euro area appears to have gained a firmer footing, the situation in greece remains difficult. and china continues to grapple with the challenges posed by high debt, weak property markets, and volatile financial conditions. but economic growth abroad could also pick up more quickly than observers generally anticipate, providing additional support for u.s. economic activity. the u.s. economy also might snap back more quickly as the transitory influences holding down first-half growth fade and the boost to consumer spending from low oil prices shows through more definitively.

as i noted earlier, inflation continues to run below the committee's 2 percent objective, with the personal consumption expenditures (pce) price index up only 1/4 percent over the 12 months ending in may and the core index, which excludes the volatile food and energy components, up only 1-1/4 percent over the same period. to a significant extent, the recent low readings on total pce inflation reflect influences that are likely to be transitory, particularly the earlier steep declines in oil prices and in the prices of non-energy imported goods.

indeed, energy prices appear to have stabilized recently. although monthly inflation readings have firmed lately, the 12-month change in the pce price index is likely to remain near its recent low level in the near term. my colleagues and i continue to expect that as the effects of these transitory factors dissipate and as the labor market improves further, inflation will move gradually back toward our 2% objective over the medium term. market-based measures of inflation compensation remain low --although they have risen some from their levels earlier survey-basedand measures of longer-term inflation expectations have remained stable. the committee will continue to monitor inflation developments carefully. regarding monetary policy, the fomc conducts policy to promote maximum employment and price stability, as required by our statutory mandate from the congress. given the economic situation that i just described, the committee has judged that a high degree of monetary policy accommodation remains

appropriate. consistent with that assessment, we have continued to maintain the target range for the federal funds rate at 0 to 1/4 percent and have kept the federal reserve's holdings of longer-term securities at their current elevated level to help maintain accommodative financial conditions. in its most recent statement, the fomc again noted that it judged it would be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term. the committee will

determine the timing of the initial increase in the federal funds rate on a meeting-by-meeting basis, depending on its assessment of realized and expected progress toward its objectives of maximum employment and 2% inflation. if the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy. indeed, most participants in june projected that an increase in the federal funds target range would likely become appropriate before year-end. but let me emphasize again that these are projections based on the anticipated path of the economy, not statements of intent to raise rates at any particular time. a decision by the committee to raise its target range for the federal funds rate will signal how much progress the economy has made in healing from the trauma of the financial crisis.

that said, the importance of the initial step to raise the federal funds rate target should not be overemphasized. what matters for financial conditions and the broader economy is the entire expected path of interest rates, not any particular move, including the initial increase, in the federal funds rate. indeed, the stance of monetary policy will likely remain highly accommodative for quite some time after the first increase in the federal funds rate in order to support continued progress toward our objectives of maximum employment and 2% inflation. in the projections prepared for our june meeting, most fomc participants anticipated that economic conditions would evolve over time in a way that will warrant gradual increases in the federal funds rate as the headwinds that still restrain real activity continue to diminish and inflation rises. of course, if the expansion proves to be more vigorous than currently anticipated and inflation moves higher than expected, then the appropriate

path would likely follow a higher and steeper trajectory; conversely, if conditions were to prove weaker, then the appropriate trajectory would be lower and less steep than currently projected. as always, we will regularly reassess what level of the federal funds rate is consistent with achieving and maintaining the committee's dual mandate. i would also like to note that the federal reserve has continued to refine its operational plans pertaining to the deployment of our various policy tools when the committee judges it appropriate to begin normalizing the stance of policy. last fall, the committee issued a detailed statement concerning its plans for policy

normalization and, over the past few months, we have announced a number of additional details regarding the approach the committee intends to use when it decides to raise the target range for the federal funds rate. these statements pertaining to policy normalization constitute recent examples of the many steps the federal reserve has taken over the years to improve our public communications concerning monetary policy. as this committee well knows, the board has for many years delivered an extensive report on monetary policy and economic developments at semiannual hearings such as this one. and the fomc has long announced its monetary policy decisions by issuing statements shortly after its meetings, followed by minutes of its meetings with a full account of policy discussions and, with an appropriate lag, complete meeting transcripts. innovations

in recent years have included quarterly press conferences and the quarterly release of fomc participants' projections for economic growth, unemployment, inflation, and the appropriate path for the committee's interest rate target. in addition, the committee adopted a statement in 2012 concerning its longer-run goals and monetary policy strategy that included a specific 2% longer-run objective for inflation and a commitment to follow a balanced approach in pursuing our mandated goals. transparency concerning the federal reserve's conduct of monetary policy is desirable because better public

understanding enhances the effectiveness of policy. more important, however, is that transparent communications reflect the federal reserve's commitment to accountability within our democratic system of government. our various communications tools are important means of implementing monetary policy and have many technical elements. each step forward in our communications practices has been taken with the goal of enhancing the effectiveness of monetary policy and avoiding unintended consequences. effective communication is also crucial to ensuring that the federal reserve remains accountable, but measures that affect the ability of policymakers to make decisions about monetary policy free of short-term political pressure, in the name of transparency, should be avoided. the federal reserve ranks among the most transparent central banks. we publish a summary of our balance sheet every week. our financial statements are

audited annually by an outside auditor and made public. every security we hold is listed on the website of the federal reserve bank of new york. and, in conformance with the dodd-frank act, transaction-level data on all of our lending--including the identity of borrowers and the amounts borrowed are published with a two-year lag. efforts to further increase transparency, no matter how well intentioned, must avoid unintended consequences that could undermine the federal reserve's ability to make policy in the long-run best interest of american families and businesses. in sum, since the february 2015 monetary policy report, we have seen, despite the soft patch in economic activity in the first quarter, that the labor market has continued to show progress toward our objective of maximum employment.

inflation has continued to run below our longer-run objective, but we believe transitory factors have played a major role. we continue to anticipate that it will be appropriate to raise the target range for the federal funds rate when the committee has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term. as always, the federal reserve remains committed to employing its tools to best promote the attainment of its dual mandate. thank you. i would be pleased to take your questions. >> thank you. the chair recognizes himself for five minutes. i hated take up time to ask .his, it is an important matter dodd-frank vastly expanded the

nonmonetary policy role of the fed, through no fault of your own, there is not been a vice .hair for supervision appointed my counterpart, chairman shelby youhe senate, has requested come on a semiannual basis until such a time that the president dean's to fill that position and prudentialthe macro regulatory role of the fed. your written response to our request, to put it politely, was not responsive. leave voluntarily -- will you voluntarily honor our request, and the answer is yes, i will accept yes, and if no, explain. janet yellen: i stand ready to respond to questions from this committee. >> i will take yes for an answer and we will issue those invitations.

i want to discuss with you chair yellen, the exit of power 13 clause. be a growingo consensus on both sides of the aisle that dodd-frank notwithstanding its intentions to constrain 13 three did not hit the mark and elizabeth warren has been rather outspoken on the matter and is actually introducing bipartisan legislation on the senate side in this regard. setting aside arguments about whether or not aig bailouts, specifically, was a good thing dodd-frank,ng, post is it your interpretation that the fed retains the power to do a similar bailout, where counterparties and creditors receive a hundred cents on the dollar, including fou

foreign entities. janet yellen: the role of lender of last resort is a critical responsibility that central banks fulfill around the world and it is why the federal reserve was created. i do believe this is a very important power. we need to address the 30 and credit pressures in times when there is unusual financial stress. however, congress did amend section 13-3 in dodd-frank. it allows the federal reserve to extend emergency credit to the financial system, only through facilities that have broad-based answer is no,he we could not use those powers to address the needs of a single firm like the aig situation. >> several other firms, if an

aig bailout was made available to a specific firm, as long as it was made to multiple forms, there is still nothing preventing the fed from injuring counterparties and creditors yet a hundred tenths on the dollar, is that correct? 13-3 was amended to state specifically -- >> i'm familiar with the statute, i'm try to figure if constrains creditors from getting 100 cents on the dollar. janet yellen: we have feeling financial firms that would not be able to put in place of broad-based facility that was intended -- ask you this question, there is obviously a difference of opinion. gave aeral reserve bank

speech dealing with 13-3 and moral hazard. isder of last resort important but so is moral hazard in creating greater systemic risk. requiredtep may be before financial stability could be assured. that would mean revealing -- repealing lending powers. are you aware of his views on the topic? janet yellen: i am aware that i disagree with him. dodd-frank has been amended to limit our powers, as i mentioned, to bail out a single firm or a feeling firm --failing firm. thatere were 800 pages would define training, but we

see no effort into finding the in defining the concepts. when would we expect to see the final rule. janet yellen: we put out a draft rule and received a number of comments and we are working hard to come out with a revision and it to be out in the fall. >> the chair now recognizes the ranking member for five minutes. >> thank you, mr. chairman. this morning, i woke up to yet another story about discrimination against minorities. it seems honda has been caught charging higher interest rates, i guess, on their loans to

african-americans and latinos. when i hear those kinds of stories and i am reminded about the predatory lending practices that took place in this country in 2008, etc., and how these predatory practices were minority communities and minorities were charged higher interest rates and when they compared the income and the , that's blacks and minorities, their credit records to whites, they could be the same but they would pay more interest rates. when i look at the loss of wealth in these communities based on the subprime lending, i cannot help but wonder when this is going to stop. and while we have you here

today, and we're talking about monetary policy and talking about interest rates, qualitative easing and etc., i did not know how much you can do to deal with this inequality. if there is anything that perhaps you can do that deals with discrimination, that deals with racism, that deals with income inequality, this deals with the problems that causes this great wealth gap that is so big right now that is may never be closed. income a lot about inequality and the wealth gap, etc. and we look at the high unemployment rates in the african-american and latino communities and sometimes, you just think, despite the struggle, despite all of the ,ork, despite the challenges

some of this stuff will never go away in this country. becausei'm asking you, you have the responsibility for goes on in this economy, relative to some of these issues, what can you do? do about honda, the banks and predator practices latinostinue to gouge thatfrican-americans, target these products to our communities, what do you say about all of these? janet yellen: let me start by saying that the practice is you described and the trend toward rising inequality, the impact it has on african-americans and disadvantaged groups is something that greatly concerns me and i think is of tremendous

concern to all americans. in terms of what's we can do when it comes to lending, we are responsible for supervision of financial institutions, to make sure that they adhere to fair testng practices and we regularly in our consumer compliance exams to make sure supervise are we abiding by congresses rules pertaining to equal credit opportunities act to make sure creditey are not unfair practices that are being directed toward minorities or any americans. that is an important goal, we of course work to make sure the

banks we supervise meet their responsibilities, which i think has been a benefit to low and moderate economies and more broadly in terms of the monetary policy responsibilities, maximum employment along with price stability are the two major goals that congress has assigned to us. after the financial crisis, when unemployment rose to over 10%, was particularly punishing to african-americans workers, moreled broadly, and a strong economy getting the economy recovering, getting it back to maximum , traditionally,

african americans and other minorities have had higher unemployment rates. we do not have the tools to be able to address structure of ,nemployment, but across groups a strong economy generally does tend to be beneficial to all americans. that is what we are working towards. there are other policies i think congress could consider that would address these issues. >> the chair recognizes the dental men from michigan -- the gentleman from michigan. >> i think we share a speced for rules-based policy, as you put it in the mid-1990's. is what sensible central banks do. and looks like we're in pretty good company.

expressed.pport most important ways to support credibility and effectiveness of forward guide -- guidance is to practice it as systematic framework. it systematically shapes current and future policy decisions. testimony before this community dr. aitken,2013, former director of the congressional budget office also endorsed of rules-based monetary policy saying that i would certainly like to see far more of a rules-based approach that is not rule out discretion because they can pick the will they want to operate. what if they can provided to the congress and american people, the american people will know are up to. forward guidance is critical and we need to know what they are going to do, rules provide that. i am curious when you and your colleagues at the said will adopt a rules-based policy?

janet yellen: use the term systematic policy. endorse following a during my termcy as vice chair and as chair, i have tried to promote systematic monetary policy and i believe that we do follow a systematic monetary policy. >> but not a rule you are willing to share? janet yellen: not a simple rule based on two variables. in the report on the second page a cleareport, we have statement of the longer run goals in monetary policy strategy. policy has totic begin by articulating what the goals are, very clearly and the

strategy that will be followed. >> you do agree that a rule-based policy is a better way to go. janet yellen: i do not agree. singles not a central bank in the world that follows a rule -- would rely only on two variables. what we do is take into account wealth of information informing our judgments about the economic outlook and the way we make policies systematic is we provide and you can see this in section three in part three of the monetary policy report, each individual, each participant, writes down their own forecast for the economy and the appropriate policies that go along with it and from that, you can get a clear stance of how we expect to conduct policy if the economy of all's. -- evolves.

>> i'm not convinced it is clear. we are not trying to handcuff you. we are asking that you write a rule within descriptive parameters to use as a reference point. one of the things you have expressed, we could find ourselves if we had a rule, we could find ourselves in negative interest rate. december saw that by writing a rule that says once we that, we go to zero and no lower. or maybe .25. we will called the taylor rule or the yellen role. we can have some of those things that are going to give -- predictability. predictability and transparency is the way to go. i know that you know that we have a big discussion drafts floating around that has some of that information in their.

just so i'm clear, you do not believe there is a time that's will be right to again go towards a will-based policy? janet yellen: we need a systematic policy, but i would strongly resist agreeing to lellow any role where -- ru where the policy depends on only the current readings of two economic variables, which is what your reference rules relies on. >> it is not say it is the rule you have to follow and we have a lot of confusion. the bank for international settlements, the bank -- the ,entral bank of central banks lower rates began to lower rates. we have a lot of confusion in regards to the direction. >> the time of the gentleman has

expired. >> thank you madam chair and my colleagues. has in discussing with taylor rule and i would like to pursue that's a little bit more. if imf is warning that greece leaves the eurozone, that it might slow growth thernationally and impact u.s. much higher than expected. i guess, i would like you to sort of speculate about how, if to thee handcuffed taylor rule, how would that impede your response to such a crisis? janet yellen: it would tell us the current setting of monetary policy should depend on only two

variables, the current level of real gdp or output gap and the current level of inflation, it obviously would not take into account in any way our judgments about the likely growth in the , how we expected the european economy would be affected or global financial .arkets by such developments in that sense, it really ,estricts any simple rule restricts the setting of monetary policy to very short-lived variables and their current values. reasons -- we the spend a great deal of time and the forecast we include in our monetary policy report that the

participants write down, we present to the public every three months, incorporate all the kind of information, what we think is going to happen in the , those factor into our economic forecast and our view is that the appropriate .ole of policy we provide a great deal of information to the public by providing these participants forecast because participants are telling the public how in light of their economic forecast, concretely with numbers, they think monetary policy should be set. that is information about the reaction function, the that isship incorporated in something like the taylor rule.

moore: can you provide us with an update? janet yellen: we appreciate congresses passing the collins fix and in light of that, we have agreed to flexibility to design capital standards that we think will be appropriate for the firms we supervise, including the insurance-based savings and loans holding companies and insurance -- we are working hard and will put in public domains and orders for a proposed rule when we have figured that out. gwen moore. we are in a five-year look back, haveolleagues say that we enshrined too big to fail. can you set the record straight?

janet yellen: i do not believe that god frank in find too big to fail. it directed us to increase the ofety and soundness financial institutions and particularly those most systemic. they gave us tools to raise capital level clarity and impose capital surcharges on the firms that we deem most systemic to use stress testing as a methodology, to make the firms much less likely to fail and the capital liquidity has increased massively since the crisis. both title toe us orderly liquidation authority, which would be a new tool to resolve this -- gwen moore: i have 10 seconds left. i think you covered it. act to my idea about the labor

market, you think that using the sequester and raising the minimum wage would be good strategies for getting our labor markets together? janet yellen: it is for congress. >> the chair recognizes the gentleman from new jersey. >> good morning. in front of me, last night, i read through what is called the joint staff report, the u.s. treasury market on october 15, 2014. it is the staff report that looked at the -- what happened in the markets in mid-october. are you familiar with the report and do you adopt the report, even though i see the name of it is the joint staff report? as a technical matter, does it mean that it is the saps opinion or also your opinion? janet yellen: i'm certainly aware of its intensive staff

work. pimm: you have been listening to janet yellen speak in her first day of humphrey hawkins testimony before the house of representatives. ,he head of the committee beginning the hearing by opening remarks and turning it over to , democrat from california, followed by questioning from urban -- representative gwen moore. anding me is michael mckee our intrepid bond reporter lisa. what do you make of the testimony and the follow-up questions? lisa: i thought it was interesting in that in the testimony, she talked about how there does not seem to be a liquidity problem in the bond market. she seems to be laying the groundwork to say that the

market is functioning correctly, guess there has been turmoil. there was turmoil in the markets. it does not seem to be substantial enough to raise serious concerns heading into the first rate hike. she is also planning to still raise rates this year, despite kind of turbulent economic data, and consistent. you are seeing that's reflected in year yield. people are pushing up their expectations. pimm: she is currently responding from a question from scott garrett, republican from new jersey. michael mckee, and looking up the voting records of the representatives asking questions, 90 8%, they stay with their own party. is it show? it is an exercise in trying to get her to agree with the political position.

it was an interesting question. there has not been a vice chair for supervisory and regulatory issues as mandated in dodd-frank. the question and talked about 13-3. no one has asked her about the testimony. pimm: it is a show. her, herit is not just knack he went through it and -- ben bernanke went through it and greensburg. we are going to have more of janet yellen's testimony on capitol hill. you're watching bloomberg market day. ♪\

pimm: good morning. federalbeen following reserve chair janet yellin's testimony, the first of a

2-day testimony. she is speaking with lawmakers and saying she expects to raise rates as soon as september plus that it will remain dependent on the economy and the health of the economy. she has been answering questions related to dodd frank legislation, transparency at the federal reserve am a and now monetary policy, even one on predatory lending practices to minorities. responding to questions from maxine waters, democrat from california. we will continue listening to her testimony and response to questions but i want to look at helm markets are responded to the testimony. >> basically, the major indices are all hugging the flatline as speak. seen janet yellen the nasdaq is up the highest. the dow and the snp are up by about 2/10