SubscribeDaily Futures Commentary June 25, 2009
Thursday, June 25, 2009
The Fed ended much of the uncertainty in the financial markets yesterday when it announced that its key lending rate would stay between 0 – .25%, and there would be no additional expansion of its balance sheet through the purchases of government assets and mortgages.
Although it did not set a hard calendar date for a hike in interest rates, refraining from additional purchases of assets sent a signal to the markets that it would allow yields to rise. This scenario created the bullishness in the Dollar after the FOMC meeting.
Traders were expressing their desire for an improvement in the interest rate differential which countered any buying from traders seeking more risky assets.
The Fed also commented that the contraction in the economy was slowing. This provided additional support. Gains may have been limited as the Fed reported that inflation was expected to remain low.
Equity markets are trading volatile overnight. There is a conflict between those who want to see a larger correction and those who are playing the long side on the minor dips. One group feels that the other is prolonging the …
Read More …
Loading ...
