The Gravitational 15 gained another +1.7% last week, and it did so against a backdrop of FG4 price a...
Fed says very little and does nothing--market waits for tomorrow news from the European Central Bank
08/01/2012 4:57 pm EST
“Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year,” the statement from the Federal Reserve’s Open Market Committee read today.
But the U.S. central bank didn’t announce a new program of quantitative easing or even extend its promise to keep rates exceptionally low through at least the end of 2014.
The former—a new program of buying of Treasuries or mortgage-backed assets—was an outside chance, market wisdom held in the days before the Fed meeting. But the latter had been gaining support as a likely alternative to any more drastic action. In the event, however, the Fed did even less than expected with a vague gesture toward slowing economic growth.
But even that disappointment didn’t move U.S. stocks significantly—the Standard & Poor’s 500 stock index was down just 0.29% for the day at the close—because all eyes remain focused on tomorrow’s meeting of the European Central Bank.
Traders are excused if they didn’t want to put on new positions today, in either direction, since tomorrow’s announcement has the potential to move the market big time. I think that’s especially true if the actions announced by ECB president Mario Draghi turn out to fall short of the comprehensive package of interest rate cuts, increased bank lending, and resumed bond buying that Draghi sketched in over the last week.
The euro fell today by 0.63% to $1.2226. I don’t think that’s an indicator of the market’s view on that tomorrow might bring from the European Central Bank. Rather I think the U.S. dollar rallied slightly against the euro on news that the Fed wouldn’t be undertaking any policy that pumped large numbers of dollars into the U.S. economy.
The schedule for tomorrow calls for an announcement from the European Central Bank at 7:30 ET tomorrow morning—before the market open in New York—and then a press conference with Draghi about 45 minutes later.
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