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Market Commentary Tomorrow FRB Chairman Bernanke begins Tomorrow FRB Chairman Bernanke begins two days of Congressional testimony. I am certain he will be questioned—ok grilled—as to why the Central Bank raised the discount rate by 0.25% in a rare intermeeting move. Many including me believe such was orchestrated at the January 26-27 FOMC meeting as all 12 District Banks as per Bloomberg had submitted requests for approval of an identical 25 bps hike in their discount rate at the time the increase occurred. Don’t get me wrong I believe an increase was warranted as my concern is that the Fed will remain too accommodative too long. Reflecting historically, before transparency became a Federal Reserve buzz word, a hike in the discount rate was how the Central Bank signaled a change in monetary policy to the general public. To wit, I think the markets will be ultra sensitive to any economic data reflecting strength and such are likely to significantly pressure Treasury prices. Fed Funds futures have already upped the of the target rate being hiked at the September FOMC meeting. Speaking of data, the S & P Case Shiller Home Index, Richmond Fed and Consumer Confidence is released today. Last night the foreign markets were down. The Dow should open nominally lower after German business confidence unexpectedly fell. The 10-year is up 6/32 to yield 3.77%. The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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