The major equity averages remain little-changed as do Treasury prices following the release of Janet Yellen's Jackson Hole address. Her talk sticks to the game plan - the first rate hike remains on tap for next year; the headline unemployment rate overstates labor market improvement; if employment or inflation picks up, hikes could come sooner than expected.
Debate at the Fed is "naturally shifting" to when the central bank should begin to hike interest rates, says Janet Yellen in her speech at Jackson Hole, as the economy is getting closer to full employment and stable inflation.
Nineteen labor market indicators tracked by the Fed suggest the decline in the headline unemployment rate overstates improvement in the labor market, she says. On the other hand, rate hikes could come sooner than expected should progress in employment pick up and/or inflation moves up at a speedier pace.
"The Committee will be closely monitoring incoming information on the labor market and inflation in determining the appropriate stance of monetary policy."
Speaking to CNBC from Jackson Hole, Williams' remarks are of interest because he's considered a dove and his mid-2015 timetable for the first rate hike might be considered slightly ahead of where markets are pricing in the first tightening.
The economy is ready for a rate hike, Kansas City Fed chief Esther George tells CNBC, a remark which shouldn't be a surprise given her hawkish record. The country isn't far from full employment, she says, and some benchmark indicators are signaling rates need to be above zero.
George spoke from Jackson Hole, where tomorrow Fed boss Janet Yellen will make the consortium's keynote address.
The 10-year Treasury yield adds another basis point following the FOMC minutes, now ahead 2.5% bps on the session to 2.43%. Looking at a rate more sensitive to Fed policy, the 5-year note yield jumps 4.5 bps to 1.625%.
The minutes show many committee members believing the labor market is improving faster than anticipated across a whole range of indicators, and the time is getting near for when it can no longer be described as underutilized.
Many members say a range of labor market indicators had improved more in recent months than they had earlier anticipated, according to the minutes of the late July FOMC meeting. "The characterization of labor market underutilization might have to change before long, particularly if progress in the labor market continued to be faster than anticipated."
The committee voted 9-1 to maintain the taper and reiterate its commitment to keep rates lower than normal for longer. Dissenting was Philadelphia Fed boss Charles Plosser, who argued the others are underplaying the improvement in the labor market and the march of inflation towards the 2% target.