(As of 7:15 am PST)
Stocks
continue to inch higher but investors seem reluctant to make big moves ahead of
the Fed’s two day policy meeting that kicks off today. The Federal Open Market Committee which sets
monetary policy decisions for the Fed is meeting today and tomorrow in a much
anticipated deliberation surrounding the Fed’s asset purchase program, also
known as QE3. Most investors and the
market expect the Fed to announce tomorrow the beginning of its bond ‘tapering’
strategy to wean the economy off the easy money policies that have driven long
term interest rates artificially low since the financial crisis. What is unknown, however, is how much the Fed
will begin to taper. Most economists
expect a $10 billion reduction of the $85 billion per month in bond purchases
the Fed is currently making. We could be
in for a wild ride in either direction tomorrow depending on what course of
action the Fed takes. Postponing the
taper until October would likely cause a stock market rally, while tapering
more than the estimated $10 billion per month may cause a selloff. We’ll have to wait until 2 pm eastern time tomorrow
to find out. In other news today, shares
of Microsoft are higher as the tech company announced a 22% dividend hike and a
$40 billion share repurchase plan. Economic data was light with a report on
consumer prices showing inflation remains in check. European and Asian markets are cautious
ahead of the Fed’s taper decision. Treasuries rose slightly sending
interest rates lower while gold and other commodities are down. Expect gains to
give way as the day progresses and uncertainty over the Fed's decision prevails.
No comments:
Post a Comment