The Bernank may delay his plan to taper bond purchases past September, as investors expect, because I have noticed a surge in interest rates this week. It is something Bernanke is watching, and will react too.
Alot of traders I believe are not reading the signs right. Many analysts are saying tapering is coming, however you have to remember that simply nothing at all is currently being done, and all this market movement is due to one thing - RUMORS, RUMORS and more RUMORS.
Ok, I will be the first to admit, rumors are always going to move the market any day of the week. However this is a big one as we are talking about a massive stimulus program that has been going on for year now. I doubt the economy is good enough for the rumors to be bought off the table and for tapering to come in quickly. Infact, I would say that looking at the dow jones chart below, the market is already pricing in tapering if indeed it does happen or even if it doesn't.
|Bernanke might postpone tapering|
I think that this selling off will also slow down the amount of tapering that COULD occur and I underline that word COULD! Right now it seems every time Bernanke sits down at capitol hill, he is just blowing steam up everyone's arse. He keeps hinting that he will take action, but my interpretation on that is that things are not good enough for him to even take the most minute of action.
I don't think that Bernanke is going to be held hostage to the bond market, and the fed right now knows that rumors can really get this market moving, so imagine if they actually had to do something.
The Fed has been buying $85 billion in treasuries and mortgage-backed securities each month in an effort to reduce interest rates. This is all part of the central bank's quantitative easing, or QE3, plan. Stock and bond market investors expect the Fed chief to slow this process as early as September but we might not see anything until the new year. Its all talk and BS in my opinion.
But again, these dates and all this BS from the Fed is just making me think there is something much bigger going on here. I mean, nothing has actually been done, and the economy is not doing that well. Or well enough for them to start taking action. This is a repeating pattern, like a cycle that is getting traders on the wrong side of the trade! But most of the big boys love it when you are on the wrong side of the trade, it means it makes their job alot easier.
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