Tuesday 14 March 2017

Awaiting a rate hike

US equity indexes closed moderately weak, sp -8pts at 2365. The two leaders - Trans/R2K, settled lower by -1.4% and -0.6% respectively. VIX settled +8.4% at 12.30. Near term outlook offers post FOMC upside. Ironically, the only downward pressure is coming from the petroleum market.




US equities were clearly under pressure from further weakness in oil.

Just consider this for a moment though... whilst WTIC oil has fallen from the $55s to the $47s, equities are barely 2% from a recent historic high of sp'2400. What do the equity bears think is going to happen to equities when oil begins another up wave?

A third rate hike

sp'500 and int' rates,

We should see the FOMC announce (2pm tomorrow) the first rate hike of the year, of 25bps to a new target range of 0.75-1.00%. This will make for the third hike since ZIRP concluded in Dec'2015.

I realise some of you still think higher rates are a bad thing.. and I can only suggest you go stare at the above chart for a few hours. Or perhaps...

Brewster doesn't want 24% interest on his $30 million
... go watch Brewster's Millions (1985), made during a time when the notion of interest rates around 1% would have sounded even more crazy than Monty not wanting interest on his cash mountain.

Goodnight from London