MORE CONFLICT AND CONFLICTING DATA

As the current FOMC meeting kicks off today we have investors waiting to hear if the Federal Reserve will be staying its course and continue its current round of tapering. It is our current belief that the FOMC meeting will be a nonevent it terms of the overall effect it has on the markets

What is moving the market is the consumer price index. Reported today was a jump in the price index which was seasonally adjusted 0.4 % . This moves consumer prices over the last 12 month higher by over 2%. The net result of higher consumer prices could be seen as the 10 year Treasury note rose by 5.5 basis points today.

Although still creating geopolitical uncertainty and turmoil in the Middle East, concerns over the fate of Iraq seemed to weaken and also cause further downside pressure in gold. As you know it is our contention the current scenario in Iraq is not a situation that will resolve itself overnight. A long and protracted civil war seems more likely than ever.

This concern also led to higher oil prices, which of course is a major inflationary factor.  The current turmoil in the Middle East is greatly influenced the price of oil as we see Brent oil close above $113 per barrel.

Sometimes it seems as though many analysts continue to look through different glasses to view the same scenarios expecting to see different results, and for the time being that continues to be one of the certainties in the market.

Wishing you as always, good trading,