By Gülbin Yıldırım
Washington Letter

Washington letter, week beginning Feb. 15

What happened last week?

Yellen's messages
Fed Chair Janet Yellen's hearings at the U.S. Congress were among the most significant events last week.
During her presentations, Yellen used a 'dovish' tone and stressed that recent financial conditions in the U.S. have become less supportive of growth. 
She sounded uneasy while answering questions related to the recession and her following statement suggested some regret over a rate hike decision made in December:
"We certainly felt in December when we made our decision to raise rates that the economy was recovering, that inflation would move up, and it would likely be appropriate to gradually, gradually continue to raise rates, not to cut them. A lot has happened since then. As I have indicated, global economic and financial developments impinge on the outlook."
Moreover, she repeated that monetary policy is not on a preset course and a lower path of the federal funds rate would be appropriate if the economy were to disappoint.
Yellen also spoke about negative interest rates upon questions from members of the Congress and stated that they are not yet off the table. 

Yellen's dovish comments were not enough to stop losses in the asset markets. The global sell off and fluctuations in oil prices sent the NYSE to a weekly loss despite the strong performance on Friday.  
The dollar also closed the week on a negative note while gold showed its best weekly performance of four years with about 5 percent increase.  
Oil prices fluctuated intensely during the week with the news coming from oil producer countries. In its latest monthly report, OPEC has cut its forecast for non-member countries while increasing its own production estimates. In addition, Venezuela proposed to "freeze" production at current levels at the beginning of the week.
Upon this news, Brent crude closed the week at US$33.43 per barrel and WTI at $29.66. 

Economic data
According to official figures announced on Friday, retail sales were up by 0.2 percent in January, a little above the 0.1 percent market expectation. This marked its third consecutive increase and helped the case for a rebound in GDP growth in the first quarter.
Also, retail sales for December were revised up from a 0.1 percent decline to a
 0.2 percent gain. 
The UMICH consumer sentiment index fell to 90.7 in early February from 92.0 in January. The index marked its lowest level in four months and was a little below the 92.3 market forecast.

New week ahead
U.S. markets will be closed on Monday in observance of President's Day.
On Tuesday, investors will watch regional Fed presidents speak. Philadelphia Fed President Patrick Harker, Minneapolis Fed President Neel Kashkari, and Boston Fed President Eric Rosengren are scheduled to speak on the economic outlook. 
On Wednesday, markets will focus on industrial production in the morning and then on FOMC minutes in the afternoon. The producer price index and housing starts for January are also on the data calendar for Wednesday. 
The data releases for the rest of the week include weekly unemployment claims, Philadelphia Fed Business Conditions Index, EIA weekly petroleum inventory and consumer price index. 

U.S.-ASEAN Summit
U.S. President Barack Obama will host leaders from the 10-member Association of Southeast Asian Nations (ASEAN) in Southern California on Feb. 15-16. 

16 Feb,2016