What We Can Expect From The Fed

If you are expecting the unexpected from the FOMC meeting, as they say in New York, fuggehdaboudit. The Fed is not inclined toward sudden or ill-considered thoughts, at least on the official newswire. (What is said extramurally by semi-rogue, generally non-voting members is, of course, another matter altogether.)

We expect a minor tightening of language when Chairwoman Janet Yellen holds her news conference tomorrow. We expect her to whack the word “patience” over the head a few times to satisfy the Fed’s critics, and then replace “patience” with some other word or expression that gives the central bank some wiggle room. Have you ever known someone in finance not to hedge their bets?

Yesterday, equities seemed to be embracing some common sense on the rate-increase matter although today those worrying about any hawkishness that might come out of the FOMC meeting seemed to have retaken the battlefield.

Gold stayed its negative course even though the dollar showed a bit more weakness today. You would think that the softer dollar of the last few sessions would be a signal to other markets as to where currency traders believe rates are heading. Jitters are jitters, however. And in the financial world, fears are often more important than realities.

Investor sentiment towards gold continues its bearish bent. ETF Securities, the gold-backed exchange-traded products, said that last week its long gold funds saw the largest weekly outflows since inception. $375 million exited the ETF.

The fear that affected gold so powerfully tipped over into platinum and palladium markets. The latter has had a particularly rough day, falling 2% as of late afternoon trading.

West Texas Crude is off again, today by over 1.5%. That acted also as an outside bearish influence on gold prices.

No matter how many ways you slice and dice today’s activity, it is tomorrow’s news – or at least the Fed statement and Yellen’s comments – that we are waiting for.

The big question they have to figure out is: just how strong is the U.S. economy?

Wishing you as always, good trading,