The debt and equity markets fluctuated amid the post Fed meeting statement. The dollar dropped and oil gained almost 6%.
Commenting about the FOMC meeting, the Committee cited potential impact from weaker global growth and financial market turmoil is the basis for maintaining current monetary policy. Moreover the Committee is now suggesting two interest rate increases instead of four during 2016 with the next possible increase being April.
I must write the Fed did state all is dependent upon the data and will act accordingly.
Oil rose yesterday for a myriad of reasons. First was the announcement of mid-April meeting of OPEC and non OPEC members to discuss capping oil production. Second was the oil inventory data where stores did not rise as much as anticipated. Third the dollar fell because of the outcome of the Fed meeting.
Oil is now up about 45% from its mid-February lows.
Earlier in the week I commented this week can be of significance given the potential headline risk of two major market catalysts…monetary policy and oil. As written a gazillion times, there is almost a perfect correlation between oil and equities. There is also an extremely strong correlation between monetary policy and interest rates.
Both appear to be very equity positive.
What will happen today?
Last night the foreign markets were mixed. London was down 0.28%, Paris down 1.62% and Frankfurt down 1.80%. China was up 3.56%, Japan down 0.22%and Hang Sang up 1.21%.
The Dow should open nominally lower as Caterpillar issued an earnings warning. Oil is up about 1.5%, broaching the psychological important level of $40/barrel. The 10-year is up 12/32 to yield 1.87%.
