US indices were mixed Tuesday with the Dow and S&P breaking out to new highs but the NASDAQ and Russell 2000 struggling to make much headway and looking tired. The Dow finished the day sitting just under 20,500 with the Russel 2000 still refusing to confirm the big cap breakouts and sitting just below 1,400. There was a lot of data out from around the world showing inflation continuing to climb, but the main focus was on Fed Chair Yellen’s testimony to Congress and her outlook for interest rates. Having historically been one of the more dovish Fed members, her tone came off as hawkish for her and I think it surprised the street a bit. She reiterated that it is better for the Fed to raise rates gradually than to wait too long and have to slam on the brakes. Most importantly, she indicated that at upcoming meetings the Fed will continue to evaluate employment and inflation and if things continue to trend as expected, further rate adjustment will likely be appropriate. Longer term, she wants to shrink the Fed’s balance sheet but doesn't want to use it as a policy tool. Traders have taken these comments, along with comments from regional Fed presidents Lacker and Kaplan as a sign that further rate hikes are on the way, perhaps as soon as March. Hawkish sentiment drove USD upward, particularly against defensive currencies like gold and JPY which gave back earlier gains. Sterling retreated on indications from Brexit Minister Davis that the country won't be ready to trigger Article 50 by the March 9 EU Summit but is on track for some time in March. The Euro also fell back, giving up gains as political fissures and cracks continue to deepen with Italy’s ruling party holding a leadership contest ahead of potential elections and Greece posting a GDP decline in Q4. Note that a rising US Dollar could create headwinds for US corporate earnings and US indices. It’s a relatively light day for Asia Pacific news with Singapore retail sales the main event. The weakening Yen could help Japanese stocks to bounce back. A correction in copper and slide in gold could drag on mining stocks, although this could be offset by the potential positive effect of an oil bounce on energy stocks. Tomorrow brings another round of Fed speakers including another day of testimony from Chair Yellen. Wednesday also brings another heavy round of economic reports including US inflation and retail sales plus UK employment. Sweden’s Riksbank interest rate decision and statement may also be of interest to see if rising inflation has had any impact on the thinking of negative interest rate countries. Oil could be active around inventory reports as prices remain torn between the positives of OPEC production cuts and the negatives of rising US oil production. Corporate News There have been no major announcements after the US close today. Economic News Significant announcements released overnight include: US producer prices 1.6% vs street 1.5% UK consumer prices 1.8% vs street 1 9% vs previous 1.6% UK retail prices 2.6% vs street 2.8% vs previous 2.5% UK producer input prices 20.5% vs street 18.5% vs previous 15.8% UK producer output prices 3.5% vs street 3.2% vs previous 2.7% UK house prices 7.2% vs street 6.5% China consumer prices 2.5% vs street 2.4% vs previous 2.1% China producer prices 6.9% vs street 6.5% vs previous 5.5% Germany GDP 1.2% vs street 1.4% Italy GDP 1.1% vs street 1.0% Eurozone GDP 1.7% vs treet 1.8% Greece GDP (0.4%) vs street 0.4% and previous 0.9% Germany consumer prices 1.9% as expected Eurozone industrial production 2.0% vs street 1.7% Upcoming significant economic announcements include: (Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore) 10:30 am AEDT Australia consumer confidence previous 97.4 4:00 pm AEDT Singapore retail sales street 1.4% 8:30 am GMT Sweden interest rate (0.50%) no change expected 10:00 am GMT Sweden Riksbank press conference 9:30 am GMT UK jobless claims change 0.5K vs previous (10K) 9:30 am GMT UK 3M jobs change street 22K vs previous (9K) 9:30 am GMT UK average weekly earnings street 2.8% 9:30 am GMT UK unemployment rate street 4.8% 10:00 am GMT Eurozone trade balance street €26.0B 10:00 am GMT Greece consumer prices previous 0.0% 8:30 am EST Canada manufacturing sales street 0.3% vs previous 1.5% 9:00 am EST Canada existing home sales previous 2.2% 8:30 am EST US consumer prices street 2.4% vs previous 2.1% 8:30 am EST US core CPI street 2.1% 8:30 am EST US real average hourly earnings previous 0.8% 8:30 am EST US retail sales street 0.1% vs previous 0.6% 8:30 am EST US retail ex auto street 0.4% vs previous 0.2% 8:30 am EST US Empire manufacturing street 6.8 9:15 am EST US industrial production street 0.0% vs previous 0.8% 10:30 am EST US DOE crude oil inventories street 3.2 mmbbbls vs prev 13.8 10:30 am EST US DOE gasoline inventories street 0 mmbbls vs previous (0.8) 10:00 am EST FOMC Yellen testimony 12:00 pm EST FOMC Rosengren speaking 12:45 pm EST FOMC Harker speaking