Janet Yellen, the head of the US Federal Reserve, doesn't believe that it's her job to boost global share markets.
But the upbeat assessment of the health of the US economy that she gave to US lawmakers overnight came as sweet music to investors' ears, strengthening their faith in the "Trump trade" – buying shares and selling bonds.
Investors, of course, have long expected that the Fed would raise US interest rates at its December meeting. Even before Yellen reiterated that a rate hike "could well become appropriate relatively soon", markets had priced in a 90 per cent chance of a rate rise.
But Yellen's view that the US economy had been making "very good progress" towards' the Fed's goals of full employment and a 2 per cent inflation, even before Donald Trump's election victory, bolstered investor confidence.
The US share market has rallied strongly, and US bond yields have surged, in the wake of Trump's surprise victory, as investors have bet that $US4 trillion in tax cuts, combined with a massive $US1 trillion infrastructure spending program and lighter regulation, will boost US growth and inflation. (Yields rise as bond prices fall.)
Indeed, Yellen herself appeared to see some merit in the market's reaction. She told US Congress's Joint Economic Committee that the "significant market moves" since Trump's victory reflected the anticipation that widening US budget deficits could have "inflationary consequences", which would force the Fed to raise interest rates.
She also warned that Trump's budget stimulus was coming at a time when the US economy was "operating relatively close to full employment". The risk is US wages could rise sharply, fuelling inflation pressures, if firms have to compete for workers.
At the same time, Yellen noted there was "not a lot of fiscal space" to run bigger US budget deficits. She pointed to US government debt forecasts, which show that the country's current debt to GDP ratio of 77 per cent, is expected to jump to 86 per cent by 2026 and to soar to 141 per cent in 2046.
Her comments reinforced investors' worries that the Trump administration will be forced ramp up bond issuance to cover its burgeoning budget deficits, and that an increase in the supply of bonds at a time when demand is weak will push bond yields even higher.
As a result, even as Yellen spoke, investors went rushing back into what's become known as the "Trump trade".
Investors believe that stronger growth and inflation will pump up company profits (because companies will be able to lift prices), but a major negative for bonds (because higher interest rates reduce the bonds they hold).
Since Trump's victory, a new mood of pessimism that has swept through the US bond market, and as a result, yields have climbed to their highest levels in 11 months.
But some leading analysts argue that the "Trump trade" may already be overdone, because the US economy is in too feeble a condition to generate the pick-up in growth and inflation that investors are counting on.
They argue that the US economy is already saddled with a huge debt burden of close to $US20 trillion, and that the boost to US growth from extra debt has been steadily declining for decades. As a result Trump's proposed big budget stimulus will only have a muted effect on US growth.
Other analysts argue that US bond yields are unlikely to climb any further because foreign buyers – particularly yield-starved Japanese and European investors - will find the returns now on offer in the US bond market too juicy to resist. They expect strong foreign demand will support US bond prices, and keep US bond yields from moving significantly higher.
Since Trump's victory, central banks in Japan and Europe have watched on in growing alarm as their bond yields have climbed higher in tandem with soaring US bond yields.
This week, the Bank of Japan demonstrated its determination to suppress Japanese bond yields by launching its first ever infinite bond tender, which saw it pledging to buy as many bonds as investors wanted to sell at a fixed price.
Similarly, the European Central Bank is also expected to try to cap the worrying rise in eurozone bond yields by expanding and extending its bond-buying program at its next meeting.
Investors, fearful that Italian Prime Minister Matteo Renzi could well be the next victim of the global populist backlash if his proposals for constitutional reforms are defeated at next month's referendum, have been dumping Italian bonds.
As a result, the spread between German and Italian government bond yields has blown out to more than 1.6 percentage points – the biggest gap since the ECB launched its bond-buying program in March 2015.
Finally, some analysts argue that the "Trump trade" is likely to run out of steam as higher US bond yields will push up borrowing costs for US companies and consumers.
Rising US bond yields have already been reflected in a spike in US fixed mortgage rates, and a slump in new mortgage applications.
The risk is that the recovery in US house prices is cut short as a result of the spike in home borrowing costs, and that US households become more frugal as the value of their main asset – the family home – falls in value.
A sharp pull-back in US consumer spending could more than offset the boost to US domestic demand from tax cuts and higher infrastructure spending.
