More balance from Fed Chair Yellen

In testimony before Congress this week, Federal Reserve Chair Janet Yellen took yet another step away from the dovish tone of her recent appearances. In particular, she noted more momentum, less slack, and reduced uncertainty over the outlook. Although her audience influenced her statements, the change in tone is taken as a signal and maintain the call for a September rate hike. Should the data not strengthen as much as believed or should financial stresses intensify, the committee could choose caution and defer the start of the hiking cycle. 

That said, data this week were mixed, with retail sales disappointing, manufacturing IP unchanged, and CPI coming in broadly as expected. Housing starts rose more than anticipated on the month and permits posted another robust increase.