Speculation surrounding the Fed’s monetary policy stance has intensified over the past week. In fact, following commentary by Chairman Ben Bernanke that suggested growth trends had improved over the past month and inflation was a greater priority going forward, the market stepped up the schedule for a FOMC rate hike. A week ago, futures were pricing in no change from the central bank in June and August, with a near 30 percent probability of a hike in September. Today, however, traders see a 15 percent chance of a quarter-point hike at the June 25th meeting and a 45 percent likelihood of one on August 5th. This hawkish turn matches a global trend which sees many central banks less concerned about growth and the financial market’s health as credit conditions improve and more anxious about the inflation that has resulted from the previous easing cycle.
[B] Improving outlook[/B]means the Federal Reserve could use this indicator to
support a rate hike. The opposite stands for a deteriorating outlook.
[B]CREDIT MARKET: HOW IS IT DOING?[/B]
[B]A DEEPER LOOK INTO THE CHANGES THIS WEEK:[/B]
[B]FINANCIAL MARKETS: HOW ARE THEY DOING?[/B]
</span>
[B]A DEEPER LOOK INTO THE CHANGES THIS WEEK:[/B]
Market conditions merely confirm the strength of the selling pressures in equities and other risk-related assets. The S&P VIX jumped sharply over the past few days to its high level in nearly two months – confirming fear that losses will accelerate. Maintaining the outlook for a bearish future for stocks, the put-call ratio has revealed a significant rise in the demand for protective puts. As the benchmark Dow index works its way back towards major support seen around 11,750, fears of an intensified decline will no doubt drive volatility and demand for puts higher.
[B]U.S. CONSUMER: HOW ARE THEY DOING?[/B]
<strong style="">
[B]A DEEPER LOOK INTO THE CHANGES THIS WEEK:[/B]
