US Equity Markets Rallied As Yellen Confirmed Monetary Stimulus Support

At her confirmation hearing to be the next Federal Reserve Chairman, Janet Yellen said, "I don’t see evidence at this point, in major sectors of asset prices, misalign-ments. Although there is limited evidence of reach for yield, we don’t see a broad build up in leverage, where the development of risks that I think at this stage poses a risk to financial stability.” With those words she signalled her support for continued monetary stimulus until she see definitive signs of a firm recovery in the U.S. economy. Yellen indicated her determination to drive down the nation's unemployment rate.

Meanwhile, in the world's second largest economy, China, President Xi Jinping, has introduced a package of reforms that is expected to have far reaching ramifications for his nation's economy. The Communist Party has set the scene for tighter controls over the finances of regional authorities, an easing of the one child policy and more land rights for farmers. It is also clear that Xi will also persevere with an anti-corruption campaign that has so far claimed the scalp of high profile politician Bo Xilai. China's equity mar-kets responded positively to the policy announcements.

U.S. equity markets rallied for the sixth consecutive week as incoming Federal Reserve Chairman Janet Yellen indicated that she will continue to support unprecedented monetary stimulus to kick start the U.S. economy. Her comments over the past week have seen indexes rise to all time highs. The S&P 500 gained 1.6% over the course of the week after closing the last session 0.42% higher at 1,798.18. Earlier in Europe, stocks also managed to rise with the DAX gaining 0.21% while the FTSE was higher by 0.41%.

Commodity prices closed the week on a lacklustre note despite all the noise surrounding Yellen and stimulus. The major indexes were barely moved on Friday. WTI crude has now fallen for the sixth consecutive week to record its longest weekly run of losses since 1998. It closed the week at $93.80. Precious metals have been supported by news of continued support for stimulus with gold gaining to $1,287 while silver was steady at $20.75. Agricultural commodities were mostly lower with grains recording big falls.