Nov 10, 2004

Fed Impact

I read the FOMC statement as saying we will get another 25 bp hike in December which is what the market has been anticipating since last Friday. This should be bullish for the dollar simply because its carry against other currencies has improved on margin since last week Thursday.

I would call it bullish for the long end of the treasury curve too as the Fed seems to be taking proper precautions against inflation.

All in all the report was what the market was expecting so the net effect should simply lend more confidence to the markets.

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