New Federal Reserve Chair Janet Yellen spoke to congress today for the first time. The Wall Street Journal’s Jon Hilsenrath plucked out this bit from her prepared remarks re: the tremors in emerging markets as stimulus winds down:
FED DOESN’T ACCEPT BLAME FOR LATEST EMERGING MARKET SELLOFF: In a section in its official report to Congress, the Fed accepts that talk of pulling back on its bond-buying program last summer triggered stress in emerging markets. But officials don’t accept that the latest round of selling is due to the Fed. “Rather, a few adverse development – including a weaker-than-expected reading on Chinese manufacturing, a devaluation of the Argentine peso, and Turkey’s intervention to support its currency-triggered renewed turbulence in emerging markets, the Fed said. In her testimony, Ms. Yellen said this doesn’t yet look like a threat to the U.S. economy. But the Fed warns in its report that a number of emerging markets, “harbor significant economic and financial vulnerabilities.” An index of vulnerability presented in this report (Page 29) highlights Turkey, Brazil, India, Indonesia and South Africa as among the most vulnerable.
Translation: Not our problem.
Four other takeaways here: