Market in Limbo Ahead of Possible Fed Flip-Flop
Tweet
Share
E-mail
Stocks are flat-to-slightly weaker Wednesday ahead of the 12:30PM ET FOMC statement which will be followed a conference call with Federal Reserve Chairman Ben Bernanke at 2:15PM ET. Investors will be looking for comments on recent economic weakness and a possible reconsideration of QE3.
The Fed is widely expected to maintain the target range for the federal funds rate at 0 to 1/4 and keep the "exceptionally low levels for the federal funds rate for an extended period" language.
The minutes from the late-April FOMC meeting showed the members were focused on an exit strategy and highlighted recent inflation which they considered as "transitory." At the April press conference, the first in history, Chairman Bernanke furthered the "fed exit" talk, suggesting QE3 was not in the cards and that "the trade-offs are getting less attractive at point."
Economic conditions since the April meeting have clearly deteriorated, which could bring about a change in heart at the Fed.
Mr. Bernanke & Co. could take the view the slowdown is just a hiccup on the US's road to recovery. Alternatively, if they take the view the slowdown is real, the Fed will be vigilante and may reconsider additional liquidity measures.
Wednesday's $9 rally in gold may suggest Mr. Market is betting on some form of QE3 in the near-term.
The Fed is widely expected to maintain the target range for the federal funds rate at 0 to 1/4 and keep the "exceptionally low levels for the federal funds rate for an extended period" language.
The minutes from the late-April FOMC meeting showed the members were focused on an exit strategy and highlighted recent inflation which they considered as "transitory." At the April press conference, the first in history, Chairman Bernanke furthered the "fed exit" talk, suggesting QE3 was not in the cards and that "the trade-offs are getting less attractive at point."
Economic conditions since the April meeting have clearly deteriorated, which could bring about a change in heart at the Fed.
Mr. Bernanke & Co. could take the view the slowdown is just a hiccup on the US's road to recovery. Alternatively, if they take the view the slowdown is real, the Fed will be vigilante and may reconsider additional liquidity measures.
Wednesday's $9 rally in gold may suggest Mr. Market is betting on some form of QE3 in the near-term.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Crude Inventory Rose 3 Million Barrels Last Week - EIA
- ADP data shows U.S. private hiring slowed to 21,000 jobs a week
- Trade Balance (May) -$77.6B vs -$78.4B Expected
Create E-mail Alert Related Categories
Economic Data, Fed, Trader TalkRelated Entities
Ben S. Bernanke, Federal Open Market CommitteeSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
