Bernanke is testifying in front of Congress today about monetary policy.
It will be the final Humphrey-Hawkins testimony of his career. Humphrey-Hawkins is the twice-per-year update on the state of the Fed that the Chairman must deliver, first to the House, and then to the Senate.
There's an obsession with Fed speak these days, given the widespread understanding that the discussions about "exit" from highly stimulative policy have begun, and that we're in a post-crisis world that may before too long not require as much easing as we've seen in the years since the collapse.
And of course, there's a long history of Fed Kremlinology, where economists and traders try to pick apart literally every world to see if they connote a bias towards tightening (hawkishness) or loose policy (dovishness).
So to feed your inner action junkie, that wants to figure connect every market blip to each word that comes out of Bernanke's mouth today, we wanted to spotlight this from a note from Citi's currency analyst Steven Englander.
Dovish phrases – ‘Growth outturns weaker than we expect’, ‘US can support 200k plus payrolls’, ‘Low inflation could continue unless offset by policy’;
Hawkish phrases – ‘Not clear how much jobs growth needed to get to full employment’, ‘No way for 2013 FOMC to pre-commit 2014 or 2015 FOMC on policy’, ‘Tapering will not be derailed by back up of bond yields’, any indication that Fed saw froth asset markets, ‘We expect growth to rebound strongly’, ‘Inflation very likely to pick up to target over time.
Those are your bingo words ladies and gentlemen. Listen closely for them or any variations, and then overreact accordingly.