In what was viewed as tacit support for near-term rate hikes, Janet Yellen revealed that the Federal Reserve intends to raise interest rates at a gradual pace in deference to the growing chorus of calls, notably from the IMF, to hold off on more hawkish policies. However, policymakers are wary of holding off, as it may necessitate a quicker adjustment higher to policies, a situation the Federal Reserve would prefer to avoid especially after witnessing the impact of quick adjustments in China. Nevertheless, the market reaction to the comments was anything but smooth as evidenced by the losses in equities and commodities while bonds and the dollar were heavily bid. This raises the stakes for a September hike amid an uptick in volatility and likelihood that economic data will continue to prove mixed as the Fed carefully eyes the inflationary outlook. Gold continued to retreat, trending back below $1150 on the back of dollar strength.