Spreadex Market Update
Markets react to Bernanke announcement
Equity markets are once again riddled with participants trying to position against central bank action and QE expectations. Today’s price action comes courtesy of Fed chairman Ben Bernanke, whom earlier today confirmed that any near-term tightening of the bond-buying program would endanger the recovery. He also added that inflation remained low, allowing for further potential upside with respect to equity returns near-term.
The immediate reaction from equity markets was indicative of a squeeze; with some participants short the market being knocked out of positions at the session’s highs. The Dow printed a high of 15,523.
Gold illustrates the spike perfectly, jumping to over $1,410 per troy ounce on the news before plummeting back down to near the session’s lows at $1,370. And although some would say moves like this smell of capitulation, the story of aggressive monetary policy by the Fed remains intact. The market, for now at least, likes what it hears.
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