Our Market Comments as of March, 20th 2014: US equity markets closed in negative territory last night. After a slow start to the trading day, with traders dealing initially in tight ranges, equities sold off with the FOMC decision to cut by another 10bn their QE3 program. The Dow Jones Industrial closed lower by -0.7%, followed by the Nasdaq Composite which registered also loses of - 0.64%, and last but not least the S&P500 registered loses of -0.61%. The FOMC continued as expected with their tappering, whilst the market kept more focused to the first interview of Janet Yellen. The new Fed Chairman layed out the new forward guidance and the Staff Economic Projections, which surprised to the hawkish side and saw the sharp move in the USD and rates. Most important highights were: - USD 10bn taper as expected ($5B USTs, $5B MBS) - Fed drops 6.5% threshold & turns focus to a ‘wide range of information on labour & inflation’ - FOMC sees slowing in winter months partially a weather factor but labour ‘on balance’ showed further improvement see sufficient underlying strength in the economy Last but not least the guidance on rates brought more jitters, where expectations rose quickly for a rate hike from the Fed as early as 2015, with expectations to guide a rate at 2.25% by 2016. European markets could open in neagtive territory after a volatile Asian session and certainly after the FOMC effect hit US equities.
Posted on: Thu, 20 Mar 2014 19:48:02 +0000
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