Oil has risen to a 15-month high, propelled by today’s surprising U.S. crude inventory drop to the lowest level since January. Additionally, on the heels of OPEC’s provisional agreement to control output, many non-members of the oil cartel appear willing to cooperate. Russia has already signaled that it will work with OPEC. Although OPEC’s proposed reduction doesn’t amount to much, the fact that the oil producers now want to work together to support oil prices has lifted the oil market sentiment in anticipation of higher prices. Read more about Hoping For a Rational OPEC 10-19-16
Today, the Federal Open Market Committee (FOMC) released minutes from its previous meeting, held three weeks ago. The notes confirm that the decision not to hike rates was a close call. released today suggest support is building for a rate increase soon but implied that the pace of increases will be slow. Although the summary of the meeting never names November or December (the two FOMC meeting this year), it is likely that Janet Yellen and her lieutenants will pull the trigger at the upcoming mid-December meeting, if they will act at all this year. Read more about Indicators Essentially Neutral 10-13-16
Yesterday, we closed out the VanEck Vectors Gold Miners ETF (GDX) March 26 put option for a nice gain. The trade certainly got off to a bad start. At its nadir, after the Fed struck a surprisingly dovish tone in late September, we had a 25 percent unrealized loss. Read more about Comeback Triumph 10-05-16
Eric Rosengren, the President of the Federal Reserve Bank of Boston, was one of the three dissenters against the Federal Open Market Committee (FOMC) decision to keep the federal funds rate unchanged—the first time three members of the committee had dissented since December 2014. Previously known as reliably dovish, Rosengren has lately been one of the Fed’s loudest hawkish voices, in favor of incrementally beginning to hike rates now. He believes that waiting too long would risk financial instability. Read more about Rosengren's Warning 09-28-16
A sign that we live in different times: The Bank of Japan (BoJ) set a rate target of zero for the 10-year bonds, another unprecedented move for the central bank that has failed to lift Japan out of decades-long stagflation despite several years of massive monetary stimulus via money printing and negative interest rates. So the BoJ changed its strategy. Read more about Surprisingly Dovish 09-21-16
Market volatility has risen in recent days. Day-to-day swings have been large. Today marks the first trading session since last Thursday that the S&P 500 did not move at least 98 basis points. Confusing messages from top Fed officials helped to throw markets for a loop.
Last Friday, President of the Federal Reserve Bank of Boston Eric Rosengren sparked the worst day for the market since Brexit by commenting that waiting to raise interest rates may increase the risk of overheating the U.S. economy. Read more about The Fed's Not-So-Reassuring Messages 09-14-16