I typed all of this up an hour and half ago and hit post and then went into a meeting. Unfortunately, it didn't post. In the end I was right about the fed decision but the volatility could have given you some sort of a mean shake if you took the chance on the trade. The Aud/Jpy has benefited from the recent moves as well as the USD/CAD.
There is surprising amount of buzz about the Fed interest rate decision today. I have looked at the CBOT fed fund futures and it appears we have a rate cut priced in toward November or December. My first response based on what the futures show would be, we could hear dovish comments from the fed. My next response is, the fed is stuck between a rock and a hard place. We are finally seeing some slowing in the economy and the real estate market is being further hammered as well as a significant credit crunch. By lower rates that would definitely stimulate the economy and some spending but it could also spurn stagflation. Stagflation occurs when inflation is going up while economic growth is not. That is what we have setting up now. Commodities are still high, sure we have seen some pull back but it is still in a growth market. The best choice from the fed would be to leave things alone. Ben Bernanke has shown he is willing to stand his ground on
Subscribe to:
Post Comments (Atom)
1 comment:
Sorry it didn't work out on the post but net result is about the same. Watch for the high risk reward ratio trades, the fed not doing anything confirms my sentiment prior in many ways
Post a Comment