Market Commentary

The two day FOMC meeting starts today.
April 27, 2010

The two day FOMC meeting starts today.  All are expecting its post meeting statement will reiterate the Committee’s intention to keep the fed funds target between zero and 0.25% for another “extended period.”  Such is perceived as meaning as another six months or three or four FOMC meetings dependent upon “evolving economic conditions.”

Most are expecting an upgrade in their assessment of economic conditions but also expect the Committee will state that inflation is not a factor at this juncture.  As widely noted all but one of the emergency funding/lending vehicles have been terminated but most believe there will be no comment about the possible imminent sale of assets accumulated over the past 18 months.

How accurate is this outlook?  We will know by 2:15 tomorrow.

Commenting upon yesterday’s market action, stocks led by the financials posted a nominal decline.  It is feared proposed legislation will hurt bank’s profits overshadowing yesterday’s release of some great earnings.

Treasury prices yesterday were little changed despite a better than expected regional manufacturing survey and ahead of a $11 billion 5 year treasury TIP auction.  As noted Monday, the Treasury also intends to auction this week a record amount of 2, 5 and 7 year notes.

Today’s economic calendar can be of significance.  The Case Shiller Home Price Index, Consumer Confidence and the Richmond Fed are all release.  All data points can influence trading.

Last night the foreign markets were down. London was down 1.20%, Paris down 1.54% and Frankfurt down 0.62%.  Japan was up 0.42% and Hang Sang down 1.51%.

The Dow should open on sovereign debt concerns. Will EU and IMF assistance stem Greece’s debt crisis?  Will the next contagion be a European debt crisis as it appears some governments are refusing to take the fiscal actions required to increase confidence?  The 10-year is up 6/32 to yield 3.78%.