Fed's Kohn says weighing need for more rate cuts

[MTnews]

Daily Market Commentary for January 27, 2010

Federal Reserve Board

Federal Reserve Board announced today after their two-day meeting, they will keep interest rates at record lows of between 0% and 0.25%. (Read more at Millennium-Traders.Com)

Economic data released today:

MBA Mortgage Applications:
U.S. MBA Market Index fell 10.9% at 513; Last Week 575.9; U.S. MBA Purchase Index fell 3.3% at 215.6; Last Week 223; U.S. MBA Refinance Index fell 15.1% at 2.260.4; Last Week 2,663.8.

New Home Sales:
U.S. December New Home Sales fell 7.6% to 342K; compared to consensus of 365K; U.S. November New Home Sales Revised to 370K from 355K.

Crude Oil Inventories as reported by Department of Energy [DOE]:
U.S. Crude Oil Stockpiles fell 3.9 Million Barrels at 326.7 Million Barrels; U.S. Crude Oil Stockpiles -3.9 Million Barrels in week; was seen increasing by 0.9 Million Barrels; U.S. Gasoline Stockpiles rose 2.0 Million Barrels at 229.4 Million Barrels; U.S. Gasoline Stockpiles rose 2.0 Million Barrels in week; was seen increasing by 0.6 Million Barrels; U.S. Distillate Stockpiles rose 0.4 Million Barrels at 157.5 Million Barrels; U.S. Distillate Stockpiles +0.4 Million Barrels In Wk; Seen -1.6 Million Barrels; U.S. Refineries Ran at 78.5% capacity versus 78.4% week ago; U.S. Refineries Ran at 78.5% capacity; was seen 78.40%.

FOMC Interest Rate Decision:
Fed leaves discount rate unchanged at 0.50%; Fed keeps Fed funds range unchanged at 0.0% to 0.25%; voted 9-1 for Fed funds rate action, hoenig dissents; tad more upbeat on U.S. economy, leaves rates near zero; Fed funds to stay exceptionally low for extended period; economic activity has continued to strengthen; economic activity likely to be moderate for a time; deterioration in labor market is abating; inflation expected to remain subdued for some time; resource slack seen keeping cost pressures down; longer-term inflation expectations stable; financial market conditions supportive of growth; bank lending continues to contract; household spending remains constrained; businesses spending picking up, firms reluctant to hire; repeats plan to end agency securities purchases in 1Q; still buying $1.25T in agency MBS, $175B in agency debt; most special liquidity facilities to expire in February; close swap deals with foreign central banks by Feb 1; continue scaling back term auction offerings.

At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U.S. stock indices ended the trading session on the world markets as well as the emerging markets including the stock market closing bell price:
DOW (Dow Jones Industrial Average) gain 47.09 points, EOD 10,241.38
NYSE (New York Stock Exchange) gain 7.26, EOD 7,035.58
National Association of Securities Dealers Automated Quotations (NASDAQ) gain 18.14 points, EOD 2,221.87
S&P 500 (SPX) gain 5.16 points, EOD 1,097.33
BEL 20 (BEL20) shed 2.78 points, EOD 2,493.67
CAC 40 (CAC40) shed 47.24 points, EOD 3,759.80
FTSE100 (UKX100) shed 59.38 points, EOD 5,217.47
NIKKEI 225 (NIK/O) shed 107.21 points, EOD 10,253.08

New York Stock Exchange (NYSE) stock market indicators for the trading session today:
Advanced stock prices 1,503 declined stock prices 1,595, unchanged stock prices 87, stock prices hitting new highs 49 and stock prices hitting new lows 15. NYSE quotes for volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the New York Stock Exchange stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: DV gain 7.15, HOD 63.67, LOD 58.21, EOD 63.32; PLT gain 2.18, HOD 27.79, LOD 26.77, EOD 27.36; USG shed 1.03, HOD 13.59, LOD 12.71, EOD 12.98; RTP gain 0.71, HOD 206.37, LOD 200.00, EOD 203.78; AIG gain 0.51, HOD 25.19, LOD 23.04, EOD 24.91; GS gain 0.65, HOD 152.93, LOD 148.27, EOD 151.60; FAS gain 4.25, HOD 72.69, LOD 67.47, EOD 72.16; CME gain 8.13, HOD 295.50, LOD 283.61, EOD 294.33; ROK gain 4.68, HOD 51.86, LOD 49.03, EOD 50.84; BLK gain 2.06, HOD 231.13, LOD 218.55, EOD 226.77; MA gain 7.72, HOD 256.43, LOD 248.37, EOD 256.33.

National Association of Securities Dealers Automated Quotations (NASDAQ) stock market indicators for the trading session today:
Advanced stock prices 1,606, declined stock prices 1,083, unchanged stock prices 122, stock prices hitting new highs 37 and stock prices hitting new lows 23. NASDAQ quotes, volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the NASDAQ stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: SANM gain 1.85, HOD 14.55, LOD 13.65, EOD 14.15; ALTR gain 1.23, HOD 22.73, LOD 22.11, EOD 22.42; PLCM shed 1.48, HOD 23.17, LOD 22.15, EOD 22.69; AAPL gain 1.94, HOD 210.58, LOD 199.53, EOD 207.88; BIDU gain 4.98, HOD 425.69, LOD 417.00, EOD 424.36; AMZN gain 3.27, HOD 123.33, LOD 118.80, EOD 122.75; APOL gain 2.27, HOD 64.60, LOD 61.87, EOD 64.15; FSLR shed 0.99, HOD 115.98, LOD 111.02, EOD 114.14; GOOG shed 0.32, HOD 547.65, LOD 536.01, EOD 542.10.

Market trends on the American Stock Exchange (AMEX) and stock market indicators for the trading session today:
Advanced stock prices 215, declined stock prices 298, unchanged stock prices 42, stock prices hitting new highs 8 and stock prices hitting new lows 4.

Chicago Board of Trade Futures Market for the day, at time of this posting:
E-mini S&P 500 (ES) Mar 10: EOD 1093.00; Change 5.75
E-mini NASDAQ-100 (NQ) Mar 10: EOD 1,816.50; Change 20.00
E-mini DOW $5 (YM) Mar 10: EOD 10,180; Change 42
E-mini S&P MidCap 400 (MF) Mar 10: EOD 719.90; Change 1.20
Nikkei 225 (Yen) Mar 10: EOD 10,305; Change -25

World Currencies for the Forex Market, for Forex Trading by active Forex Traders, at time of this posting:
Euro 0.7132 U.S. Dollars 1.4022
Japanese Yen 90.0200 to U.S. Dollars 0.0111
British Pound 0.6187 to U.S. Dollars 1.6163
Canadian Dollar 1.0645 to U.S. Dollars 0.9394
Swiss Franc 1.0499 to U.S. Dollars 0.9525

COMMODITY MARKETS:
Energy Sector - Nymex:
Light Crude (March 10) shed $1.06, EOD $73.65 per barrel ($US per barrel)
Heating Oil (March 10) shed $0.03, EOD $1.93 a gallon ($US per gallon)
Natural Gas (March 10) shed $0.19, EOD $5.24 per million BTU ($US per mmbtu.)
Unleaded Gas (February 10) shed $0.03 EOD $1.94 gallon ($US per gallon)

Metals Markets - Comex:
Gold (February 10) shed $13.00, EOD $1,086.50 ($US per Troy ounce)
Silver (March 10) shed $0.44, EOD $16.43 ($US per Troy ounce)
Platinum (April 10) shed $30.50, EOD $1,500.80 ($US per Troy ounce)
Copper (March 10) shed $0.11, EOD $3.23 ($US per pound)

Livestock and Meat Markets - Chicago Mercantile Exchange (cents per lb.):
Lean Hogs (April 10) gain $0.28, EOD $68.95
Pork Bellies (February 10) gain $0.30, EOD $81.70
Live Cattle (April 10) shed $0.35, EOD $88.98
Feeder Cattle (March 10) shed $0.45, EOD $98.53

Other Commodities - Chicago Board of Trade (cents per bushel):
Corn (March 10) shed $3.25, EOD $358.25
Soybeans (March 10) shed $16.00, EOD $929.00

BOND MARKET:
2 year EOD 99 30/32, change -13/32, Yield 0.90, Yield change 0.09
5 year EOD 101 4/32, change -5/32, Yield 2.37 Yield change 0.03
10 year EOD 97 25/32, change -6/32, Yield 3.64 Yield change 0.02
30 year EOD 97 4/32, change 3/32, Yield 4.55, change 0.00

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Millennium-Traders.Com

[FX-Update]

Click Here To Read The Article "Fed Keeps Rates Unchanged"

[Matt]

This was no big surprise right?

[cadedvd]

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[FX-Update]

Click Here To Read The Article "Fed's Lacker Attempts to Square the Circle"

[FX-Update]

Click Here To Read The Article "Fed Members Downgrade Economic Outlook for the U.S."

[Forex-News]

Click Here To Read The Article "Fed's New Deal Prompts Bigger Deal for Dollar"

It appears that currency traders are twisting the Fed's words out of shape having fully digested the latest policy statement and creating a sudden reversal in demand for dollars. The FOMC didn't really tell the market anything new and although they haven't necessarily caved in to pressure building since the

[gundang_FOREX]

Ahh,, whatyagonna do?

[TradingEzra]

All the Fed needs to say to the public is something like, "you see this money that was yours, its over there now in Europe."

[DickP]

This prompted TEET-TEE for the dollar, very little, when are people going to learn?

[FX-Update]

Click Here To Read The Article "Fed Stimulus Feeds Risk Appetite and Subsequently Drives Carry Interest Higher"

One of the most fundamentally-pivotal weeks in many months has passed; and the developments through this period have significantly boosted investors’ appetite for risk and fortified the perceived stability of the carry trade.

[FX-Update]

Click Here To Read The Article "Fed Surprises Markets with Scope of QE2"

For the last few months, and especially over the last few weeks, the financial markets have been obsessed with the rumored expansion of the Fed’s Quantitative Easing program (”QE2?). With the prospect of another $1 Trillion in newly minted money hitting the markets, investors presumptively piled into stocks, commodities, and other high-risk assets, and simultaneously sold the US Dollar in favor of higher-yielding alternatives.

On Wednesday, rumor became reality, as the Fed announced that it would expand its balance sheet by $600 Billion through purchases of long-dated Treasury securities over the next six months. While the announcement (and the accompanying holding of the Federal Funds Rate at 0%) were certainly expected, markets were slightly taken aback by its scope.

Due to conflicting testimony by members of the Fed’s Board of Governors, investors had scaled back their expectations of QE2 to perhaps $300-500 Billion. To be sure, a handful of bulls forecast as much as $1-1.5 Trillion in new money would be printed. The majority of analysts, however, New York Fed chief William Dudley’s words at face value when he warned, “I would put very little weight on what is priced into the market.” It was also rumored that the US Treasury Department was working behind the scenes to limit the size of QE2. Thus, when the news broke, traders instantly sent the Dollar down against the Euro, back below the $1.40 mark.

On the one hand, the (currency) markets can take a step back and focus instead on other issues. For example, yields on Eurozone debt have been rising recently due to continued concerns about the possibility of default, but this is not at all reflected in forex markets. During the frenzy surrounding QE2, the forex markets also completely neglected comparative growth fundamentals, which if priced into currencies, would seem to favor a rally in the Dollar.

On the other hand, I have a feeling that investors will continue to dwell on QE2. While the consensus among analysts is that it will have little impact on the economy, they must nonetheless await confirmation/negation of this belief over the next 6-12 months. In addition, all of the speculation to date over the size of QE2 has been just that – speculation. Going forward, speculators must also take reality into account, depending on how that $600 Billion is invested and the consequent impact on US inflation. If a significant proportion of is simply pumped into domestic and emerging market stocks, then the markets will have been proved right, and the Dollar will probably fall further. If, instead, a large portion of the funds are lent and invested domestically, and end up buoying consumption, then some speculators will be forced to cover their bets, and the Dollar could rally.

Unfortunately, while QE2 is largely seen as a win-win for US stocks (either it stimulates the economy and stocks rally, or it fails to stimulate the economy but some of the funds are used to foment a stock market rally anyway), the same cannot be said for the US Dollar. If QE2 is successful, then hawks will start moaning about inflation and use it as an excuse to sell the Dollar. If QE2 fails, well, then the US economy could become mired in an interminable recession, and bears will sell the Dollar in favor of emerging market currencies.

[FX-Update]

Click Here To Read The Article "Fed Unlikely Changes Easing Stance Despite G20 Pressures"

Fed's re-entry to QE sparked risk appetite and sent financial markets, including equities, growth currencies, bonds and commodities, higher. While investors were thrilled amid anticipations that liquidity injections will boost economic recovery in the US, Fed’s move has attracted many criticisms. Renowned economists and financial officials commented Fed’s QE will

[progresso]

Who are these "FED MEMBERS" that they speak of

[Jones]

The fed's new deal of Quantitative Easing?

[Rasheen]

What type of spam is this XRunner?

It posts to boards and blogs automatically.

[Jasminelover]

Federal Reserve December 14, 2010 meeting minutes released on Tuesday (January 4, 2011), showed that Fed policy makers believed that the U.S. economic recovery still need support of monetary policy.

Despite the U.S. economic outlook is bright. The Federal Reserve would not change its plan to buy 600 billion U.S. dollars in treasury bonds.

In addition, the Federal Reserve said the U.S. dollar was stronger than previously expected; U.S. Federal Reserve agreed to extend the exchange program.

[lliop]

Thanks FED for continuing to keep American down

[noah9]

What exactly does this mean when the fed meets all the time?