Bill Cara: Long-awaited Bernanke Fed meeting no surprise, Tues., Mar. 28, 2006, 2:28 PM

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March 28, 2006

Long-awaited Bernanke Fed meeting no surprise, Tues., Mar. 28, 2006, 2:28 PM

From 1:30 pm leading up to the FOMC announcement, the financial stocks had been out-performing the DJIA by a good margin. Then at 2:15pm, the FOMC said that there is strong economic growth, yada yada, and so they were raising the Fed Rate by 25-basis points to 4.75-pct, with indications it would continue to raise to 5.0-pct at least.

Then, for 10-minutes, the financial stocks dropped like a ton, along with the DJIA.

Wait another ten minutes. Things may change.

But, all this was expected. The $USD is rallying. Gold (GLD) is holding up.

The U.S. bond market has not fared well. Yield on the 30-year T-Bond has jumped to 4.805-pct.

Posted by Posted by Bill Cara on March 28, 2006 02:26:54 PM | Category: Economics

Discourse

Let the (attempted) spin begin!

Posted by: MarkM at March 28, 2006 2:38 PM [link]

Adding some bond exposure here. Not calling any bottoms here, always in scale, but:

Notable extreme in negative sentiment (Rydex Bonds)
Notable extreme in negative sentiment (Rydex Utes)

Insiders buying in CE bond funds

CE bond funds which had held sizable premiums a short time ago now falling back to earth.

Bonds look undervalued relative to stocks.

Posted by: stockman at March 28, 2006 3:47 PM [link]

Anyone here read Jim Sinclair's daily blog? Today he stated that one of the great risk in increasing the discount rate further is:

"The following formula: higher interest rates = lower business activity = lower corporate profits and personal income = a geometric drop in tax revenues = a huge increase in the US federal Budget deficit = a precipitously lower US dollar."

Anyone disagree with this?

Posted by: JB at March 28, 2006 7:05 PM [link]