Market remain neutral over the comments of Janet Yellen

Janet Yellen is presenting the FED's biannual testimony before congress today. This is a two day event, though the first day is usually the major market movers.

Key points in the testimony -

• FED recognizes the current strength in the labor market through the rise in the NFP headline figure and fall in long term unemployed.

• Nevertheless it believes that further improvement is required in the wage growth and participation rate.

• FED recognizes the strength in GDP growth but expects such rate of growth (3.75% in second half of 2014) to be unsustainable at this stage but expect it to be strong enough.

• FED has shrugged off fear over falling inflation and falling inflation expectation. According to FED they remain subdued due to monetary policy easing abroad & lower oil price.

• FED will prefer conventional measures & tighten through interest rates not the balance sheet management.

• FED would change forward guidance before any rate hike & absence of the patience word would mean policy change at any meeting though not an assured condition.

Analogy & Reaction -

• Federal Reserve is going to hike rates and sounds like June this year.

• The pace of the rise will be gradual and will remain below the longer run average.

• Market remained unmoved after the comments. Euro is trading at 1.133, Yen at 119 & pound at 1.545.

• Stock market is also stable. S&P 500 is trading at 2114, up 0.23% for the day.