Wednesday, June 25, 2008
Fed Day!
The Fed spoke today and the markets ended with gains though fell off their intraday highs. The Dow added 4.40 points to close the session at 11,811.83. The SPX gained 7.68 points to end on 1,321.97. We have no play on currently.
The main news of the day was not the news that US interest rates will be kept on hold. But rather the Fed statement accompanying the rate decision. It did provide some insight to how the Fed views the economy and inflation. The vote was 9-to-1 in favour of holding the Fed funds rate at 2.0 percent with only noted hawk Richard Fisher voting for a hike. The fact is that inflation pressures remain and have even worsened and this has taken precedence at the Fed. Nonetheless, economic weakness continues, especially in the housing and credit markets. Though rate hikes might not occur in the near term, a possible hike may come by the end of 2009.
Not only did we get the Fed statement Wednesday, but economic data on new home sales, durable goods orders and weekly crude inventory levels was also released. New home sales unexpectedly fell to a level of 512,000 annualized units, which is at levels not seen since the early 90’s. In the past year, new home sales are down 40.3 percent. Home prices also showed weakness, falling 5.1 percent to a level of $231,000 leaving the year on year decline at 5.7 percent.
Durable goods orders were flat in May, as expected. However, orders excluding transportation were down 0.9 percent. Nondefense capital goods orders rose 0.4 percent, but still remain soft and this doesn’t bode well for business spending. Oil prices moved lower Wednesday following an unexpected rise in crude inventory levels. Crude closed the session with a loss of $2.45 to a price of $134.55.
Until next time.
The main news of the day was not the news that US interest rates will be kept on hold. But rather the Fed statement accompanying the rate decision. It did provide some insight to how the Fed views the economy and inflation. The vote was 9-to-1 in favour of holding the Fed funds rate at 2.0 percent with only noted hawk Richard Fisher voting for a hike. The fact is that inflation pressures remain and have even worsened and this has taken precedence at the Fed. Nonetheless, economic weakness continues, especially in the housing and credit markets. Though rate hikes might not occur in the near term, a possible hike may come by the end of 2009.
Not only did we get the Fed statement Wednesday, but economic data on new home sales, durable goods orders and weekly crude inventory levels was also released. New home sales unexpectedly fell to a level of 512,000 annualized units, which is at levels not seen since the early 90’s. In the past year, new home sales are down 40.3 percent. Home prices also showed weakness, falling 5.1 percent to a level of $231,000 leaving the year on year decline at 5.7 percent.
Durable goods orders were flat in May, as expected. However, orders excluding transportation were down 0.9 percent. Nondefense capital goods orders rose 0.4 percent, but still remain soft and this doesn’t bode well for business spending. Oil prices moved lower Wednesday following an unexpected rise in crude inventory levels. Crude closed the session with a loss of $2.45 to a price of $134.55.
Until next time.
# posted by Paul @ 6:34 PM 
