Will the Federal Reserve be cagey about QE3?
*Financial Times, by Jamie Chisholm, April 4, 2012:
''Stocks and commodities are in retreat after the US Federal Reserve
curbed expectations of more monetary stimulus, providing an excuse for
bullish positions to be pared after a good run for risk assets.
Selling is also being encouraged by a disappointing auction of Spanish
government debt, which has revived tensions in the eurozone sovereign
bond complex.''
''Growth-focused assets are generally having a hard time across many
sectors. Copper is losing 1.5 per cent to $3.86 a pound, and the
Australian dollar, usually highly correlated to perceptions of global
resource demand, is down 0.6 per cent to an 11-week low of $1.0262,
though part of the Aussie's weakness is the result of Sydney announcing
an unexpected trade deficit for February.
Havens are seeing inflows, with the US dollar index gaining 0.3 per
cent and US 10-year bond yields slipping 4 basis points to 2.25 per
cent after rising sharply in the previous session.
The latest bout of selling has been triggered partly by some traders
inferring from the Fed minutes released on Tuesday that another round
of quantitative easing, or asset purchases, is less likely. Many
investors perceive a significant correlation between rounds of central
bank largesse and gains for most risk assets. This is
particularly true of gold, which is down 0.8 per cent to $1,631 an
ounce, a near three-month low.
But the corollary of the Fed's supposed reticence is that the economy
may be in less need of support. This then puts more emphasis on
economic data not to disappoint. The big news in this regard will
come on Friday, when the US non-farm payrolls numbers are
released. On Wednesday traders will receive a report on private
sector employment from ADP, the payroll processor, and Thursday's
weekly jobless figures.
To some analysts, the pullback for risk assets represents a period of
consolidation given their rise -- the FTSE All-World equity index has
gained 11 per cent in 2012.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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