Yellen is likely to address a number of themes - Nomura

Analysts at Nomura's take on the topic of Yellen’s speech as, “Financial Stability,”  is described as a bit of a surprise.

Key Quotes:

"We had expected her to make a major speech before the September FOMC meeting that focused on the Federal Reserve’s plans for its balance sheet. We think the FOMC has done a good job of laying out how balance sheet roll-off will begin. The minutes to the last FOMC meeting confirm that the Committee is likely to take the decision to begin rolloff at its next meeting. We expect Yellen to reiterate that expectation next week.

But many longer-term issues remain, including how the FOMC will control short-term interest rates, the composition of the Federal Reserve’s portfolio once roll-off ends, and how banks are likely to respond to the decline in the supply of Fed reserves. It appears that the FOMC is prepared to begin the process of allowing its balance sheet to roll off without offering any more analysis or discussion of these issues.

With the topic of “Financial Stability” Yellen is likely to address a number of themes. First, we expect her to repeat her argument that following a period of adjustment and regulatory reform, the US financial system is sound and resilient. Banks are wellcapitalized, and vulnerabilities from leverage in both the financial and non-financial sectors appear moderate. The risk of another financial crisis has been substantially reduced. We also expect Yellen to say that some easing of regulatory requirements for small banks may be appropriate. This was a theme that she stressed in her last congressional testimony on 12 July. Nonetheless, risks remain."