ETX Capital Daily Market Bite, 21st August, 2013: Stocks Down; Markets Look To FOMC Minutes
August 21, 2013 7:20 am
August 21st, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Taper blues continue to curb enthusiasm to build risk across equity, commodity and forex markets Wednesday. US Treasury 10-year note still elevated at 2.82% but off two-year highs seen this week. FOMC meeting minutes to steal the show later with many in the market viewing the report as a deciding-factor for tapering next month by the Fed. Must note, FOMC minutes are backward looking so unwise to pin your view on tapering on the minutes alone.
Data in the US has improved since the previous Fed policy meeting but more importantly, various Fed-members U-turned on accommodative easing measures. Fedspeak over the past month suggests greater unity on the FOMC with now more members endorsing a reduction in asset purchases by the Fed. In fact, it’s Fedspeak that has almost convinced the market that September tapering is now inevitable.
However, market participants seem to have dismissed the fact that momentum in the labour market remains slow — the Fed may refrain from initiating tapering for that reason as we all know that tapering stimulus is linked to a drop in the unemployment rate which still stands at 7.4%, above the Fed’s target of around 6.5%.
There is likely to be little fresh information in the minutes but even still, investors will be obsessing over the minutes on Wall Street later, Asian markets early Thursday and here in Europe tomorrow morning. If the Fed does however, indicate the amount of tapering it intends to initiate, it could quell the markets’ nerves by removing one of the biggest question marks left over Fed monetary policy going forward. Current expectations are for the Fed to drop the size of asset purchases to around $75billion per month from $85billion.
Recap of Asia overnight: lacklustre session with a continuation of the selling seen in the past four sessions as investors in the region exhibit nerves ahead of the Fed minutes. Japanese, Hong Kong, China and Korean markets all declined. Later in the US, we have existing home sales data. Closer to home, there’s little on the data docket other than the CBI’s industrial trends data at 1100 BST. All eyes on Fed!
August 21st, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Taper blues continue to curb enthusiasm to build risk across equity, commodity and forex markets Wednesday. US Treasury 10-year note still elevated at 2.82% but off two-year highs seen this week. FOMC meeting minutes to steal the show later with many in the market viewing the report as a deciding-factor for tapering next month by the Fed. Must note, FOMC minutes are backward looking so unwise to pin your view on tapering on the minutes alone.
Data in the US has improved since the previous Fed policy meeting but more importantly, various Fed-members U-turned on accommodative easing measures. Fedspeak over the past month suggests greater unity on the FOMC with now more members endorsing a reduction in asset purchases by the Fed. In fact, it’s Fedspeak that has almost convinced the market that September tapering is now inevitable.
However, market participants seem to have dismissed the fact that momentum in the labour market remains slow — the Fed may refrain from initiating tapering for that reason as we all know that tapering stimulus is linked to a drop in the unemployment rate which still stands at 7.4%, above the Fed’s target of around 6.5%.
There is likely to be little fresh information in the minutes but even still, investors will be obsessing over the minutes on Wall Street later, Asian markets early Thursday and here in Europe tomorrow morning. If the Fed does however, indicate the amount of tapering it intends to initiate, it could quell the markets’ nerves by removing one of the biggest question marks left over Fed monetary policy going forward. Current expectations are for the Fed to drop the size of asset purchases to around $75billion per month from $85billion.
Recap of Asia overnight: lacklustre session with a continuation of the selling seen in the past four sessions as investors in the region exhibit nerves ahead of the Fed minutes. Japanese, Hong Kong, China and Korean markets all declined. Later in the US, we have existing home sales data. Closer to home, there’s little on the data docket other than the CBI’s industrial trends data at 1100 BST. All eyes on Fed!
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