The main event enters the Capital Markets ring today. In June the Fed acknowledged ‘the pace of economic contraction is slowing’, however, conditions in financial markets have generally improved in recent months. They noted that inflation will ‘remain subdued for some time’, which will warrant keeping the Fed funds rate at ‘exceptionally low levels for an extended period’. It would be a shock if Bernanke and Co. decided to change their stance on rates. The US Yield curve would be smoked during the mid-week auctions too! Will there be a hint of an exit strategy this afternoon?
The US$ is stronger in the O/N trading session. Currently it is higher against 12 of the 16 most actively traded currencies in a ‘whippy’ trading range.
Not much to get enthusiastic about yesterday in the US. The main event occurs at 2.15pm this afternoon. Will the Fed soften their stance on the state of the economy? It’s a slam dunk that rates will not change. But, whatever is decided and announced...
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