The U.S. Federal Reserve’s decision-making arm, the Federal Open Market Committee (FOMC), concluded its two-day meeting today. Since there was very little chance that the Fed would vote to raise the federal funds rate at the meeting, its decision to hold the target range for said rate at 0.25 to 0.5 percent came as no surprise to anyone.
More interesting to observers: the tone of the policy statement, always closely scrutinized for hints of future action. Read more about Fed Announcement Helps Our Option Trade 07-27-16
Spot gold fell $16 to $1,313 today and the U.S. dollar has climbed to a four-month high as market participants seem to believe that the odds for an interest rate hike this year has risen.
For the first time since the Brexit vote a little less than four weeks ago, the Fed Funds Futures market now thinks there’s a better than 50 percent chance that the Fed will act at least once by the end of 2016. Read more about Fed on the Menu 07-20-16
Market action has lately alternated between concern and relief. U.S. stocks have fully recovered from the Brexit vote after market participants realized that there’d be little immediate impact on the U.S. economy and that uncertainty would force policymakers to stick to easy monetary policies that favor risky assets. Furthermore, by comparison to other equity markets around the world, the U.S. stock market is still a haven in which investors feel fairly comfortable parking their funds when risks in overseas markets rise. Read more about Concern and Relief 07-13-16
Yesterday we closed out the iShares Silver Trust (SLV) January (2018) 20 call option for a 28 percent gain in five calendar days (only 2 trading days). While we believe strongly in silver’s fundamentals, the metal had rallied so much that it’s overbought and perhaps ripe for a correction. Given the quick gain in the trade, we decided to lock in the profit and wait for another opportunity. Read more about Standing Pat, For Now 07-06-16
Pre-referendum trading action indicated that markets widely expected the U.K. to vote to stay in the E.U., but the voters had other ideas. By a margin of 52 to 48, they voted to leave. Read more about Don't Read Too Much into the Last Few Days' Action 06-29-16