Looking at equities today–and the interest rate complex, it seems like markets are a bit on edge as we await the Federal Reserve Open Market Committee meeting results on Wednesday. Both the DJIA and the S&P500 are off 1/4 to 3/4% with the 10 year treasury up 2-3 basis points.
Right now the results of that meeting are likely more tentative than we have seen for near a year. Prior to this particular meeting I was confident they would continue a steady policy course–QE of $120 billion monthly, but now it would seem that the Fed would have to announce a consideration of a taper on QE–I really doubt their announcement will be more than a ‘consideration’ of a taper.
Of course as always we simply wait and watch. History shows that one can’t really prepare for these types of events. I suppose one could hedge with various instruments–but in the end hedges aren’t free and it is likely a cost will be incurred for nothing.
The one item that concerns me is how little concern there is over a taper. Everyone seems to have bought into the ‘transitory’ story that any deviation may be greeted strongly–oh well I won’t lose sleep over something so uncontrollable.