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Takeaway: Fed head Janet Yellen's speech Friday had key investment implications for Copper, Gold and Long Bonds.

A Look At How Yellen Is Moving Markets This Morning - Yellen cartoon 04.06.2016

Fed head Janet Yellen spoke at Harvard University on Friday and supplied her latest thinking on Fed policy. 

“It’s appropriate, and I’ve said this in the past I think, for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate," Yellen said.

Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers this morning.

"Friday’s Yellen QA @Harvard was easily her most hawkish of the year – she said she’s “probably” going to raise in June or July based on her forecast. Since her forecast has always been the risk, there’s not a lot I can own into her making another policy mistake (tightening into a slow-down like she did in DEC); hence my sell signals in Treasuries, Utes, etc. Friday."

 

Look at the falling 10-year Treasury yield despite the Fed's December rate hike:

 

A Look At How Yellen Is Moving Markets This Morning - 10yr treasury 5 31

Meanwhile in commodities...

"Copper is down -0.6% this morning => Dollar Up, Rates Up deflates the “reflation” – Gold gets this too. Come June/July I can’t see why markets won’t look like they did by the end of DEC and through JAN. If you have Hedgeye’s GDP and profit cycle forecasts (Q2 will be the worst – Q1 was not the “bottom”), you might have our view of 1-3 month risk here."

 

As for Gold...

The risk to macro markets is that Janet Yellen makes her second rate hike mistake. 

Remember Yellen is a labor economist so ahead of Friday's non-farm payroll report, here's her favorite labor market indicator. Note: It's deteriorated for the fourth straight month:

A Look At How Yellen Is Moving Markets This Morning - yellen favorite indicator

More to be revealed.