Wednesday, June 24, 2009

Fed Statement

At first blush this should be a bearish Fed statement for equities. At least it should take the tail risk away from a major rally. Would not be shocked to see the market drift down the rest of the day.


Anonymous said...

The statement is overall bearish.. but what's ur opinion on last line (wrt impact on equity mkts).

"The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted."

Market Seer said...

I don't think it means much of anything in relation to equity markets.

I may be mistaken but I think that was identical language or very similar language compared to the last meeting statement (please correct me if I am wrong).

The Fed's balance sheet has seen increased holdings as a result of QE and decreased liquidity program amounts for a push. In otherwords in the last three months the size of Fed's balance sheet hasn't really moved much even as the composition has changed. I think that is what this is referring to more than anything.