I am uncertain what the markets are looking for from Bernanke. In the longer term I don't believe Bernanke can make much of a difference as interest rates are already quite low.
If Bernanke disappoints today I believe a sell off can likely be bought for a trade. There is very heavy put buying today and hence I believe people are a little too well prepared for a disappointment.
2 comments:
Market expected 2 things going into FOMC: 1) The twist and 2) Reduction in interest on excess reserves. #1 was deemed positive while #2 negative though only for banks. We got #1 roughly in the amount expected. Did not get #2, which should have acted as a support for banks. Yet the sell off (!) Just can't figure out.
Everybody expected everybody else to be expecting more, so when it was less, everybody sold because they expect everybody else to sell. Really quite simple.
[edit] I'm responding to A.
revelo
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