Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Tuesday, September 19, 2006

What The Market Says About Future Fed Actions

By Yaser Anwar, CSC of Equity Investment Ideas

Most investors expect the Fed, which meets this Wednesday September 20, will not raise short-term rates and will remain on ‘hold’.

What investors should be worried about though is; What sort of rhetoric will they speak this time? Yesterday I highlighted how the CPI is near 10-year highs, signaling inflation but The FOMC is all but certain to maintain its target for overnight federal funds at 5.25%, extending the pause it initiated at the August meeting after 17 straight quarter-point increases.

If you observe the EuroDollar action, you will notice very low probabilities of Fed raising rates again & the likelihood of Fed holding still till next year, when most market constituents expect them to start cutting rates.

In the event the central bank leaves interest rate policy unchanged, investors can expect potential call option buying opportunities in the five-year T-note and Eurodollar futures markets.

If you have time do go through ML's Global Fund Manager Survey

Powered by Blogger