Risk-On Trades Dominate Before FOMC Release Wednesday
Things are relatively quiet on the news front this morning with investors positioning themselves ahead of this week’s FOMC decision, which will likely come alongside a cut to their 2013 growth projections. Sentiment is generally higher and classic risk-on trades are dominating in early trading, with most stocks, developed country bond yields, and risk currencies higher while the yen weakened after its biggest weekly advance in four years. Natural gas is rebounding, up +2% on the day to $3.8, while crude oil is higher by +0.4%; copper sold-off overnight and is off by -0.44%. U.S. Treasuries were steady overnight, with tens trading at 2.11%.
The Week Ahead (EST)
Market participants are anxiously awaiting word from the Federal Reserve on its intentions regarding their current asset purchase program, which we may or may not hear more about on Wednesday afternoon. It would seem the central bank is unlikely to hint at when it plans to begin tapering asset purchases, considering $2.5 trillion dollars’ worth of market value has been shaved off equities since Bernanke told congress tapering sooner rather than later was possible if economic conditions were to warrant it. After the recent drop in stocks and amid soaring interest rates, the Fed should attempt to ease volatility over the coming weeks. The G8 begins its two-day summit today in Northern Ireland and its apparent that Syria will dominate the conversion. Also, don’t forget it is Quadruple Witching Friday- be wary of noise surrounding that event.
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