In a speech this morning, Fed Chair Yellen said that Fed officials widely share the view that further improvement in the labor market is needed before the Fed should begin to raise the fed funds rate. According to Yellen, the US economy is still “considerably short” of the Fed’s goals. She emphasized several measures indicating that considerable slack remains in the labor market. The labor force participation rate remains low by historical standards. A lot of people who could be working have become discouraged by their lack of success in finding a job and have stopped trying. Seven million people are working part-time, and many of them would prefer to be working full-time. A large number of people have been unemployed for six months or more, which looks bad when applying for jobs. The JOLTS data shows that few people are quitting their jobs voluntarily. When the labor market is stronger, people typically are more willing to risk seeking better opportunities. Finally, wage gains have been small. Yellen’s comments suggested that the Fed may wait longer than expected to raise the fed funds rate, which lifted stocks and had little lasting impact on MBS.