Fed's Latest Policy Move

Daily Market Commentary for September 27, 2011

Per Dennis Lockhart, President of the Atlanta Federal Reserve Bank, the Fed's latest policy move to extend the maturity of its balance sheet, dubbed Operation Twist, will only have a "modest positive impact" on the economy. (read more at Millennium-Traders.Com) http://www.millennium-traders.com/ne...ommentary.aspx

U.S. markets were sharply higher today, with the Dow Jones Industrial Average sitting on a gain of over 260 points by the noon hour on Wall Street. Trading action was choppy however, creating a difficult trading atmosphere for trading stocks, futures and Forex.

S&P/Case-Shiller 20-city composite released indicates U.S. home prices rose in July, for the fourth month in a row. Since the Case-Shiller index includes data taken over three months, numbers include transactions from May and June. Year-on-year loss narrowed to 4.1% as prices rose 0.9% on a monthly basis. Annual gains were posted for Detroit - up by 3.8% from June levels and up 1.2% from July 2010 - and Washington D.C. - prices higher by 2.4% on a monthly basis and higher by 0.3% on an annual basis - compared to the same period of 2010 with prices down 31% from their peak five years ago. Minneapolis saw the worst fall with a 9.1% annual drop but, saw a 2.6% monthly increase for July for the worst figure of the 20 cities measured.. Monthly drops of 0.2% and 0.1% respectively were seen in Las Vegas and Phoenix. In August, while Existing-home sales climbed, new-home sales and construction remain in a low holding pattern. While mortgage rates remain at record lows, availability is limited due to tougher credit standards.

Conference Board reported an improvement in consumer confidence, in September. Consumer-confidence index rose to 45.4 in September from 45.2 in August after it plunged on U.S. debt worries, among other factors. "Consumer expectations, which had plummeted in August, posted a marginal gain. However, consumers expressed greater concern about their expected earnings, a sign that does not bode well for spending," said Lynn Franco, director of the Conference Board's consumer research center, in a statement. August confidence reading was upwardly revised from a prior estimate of 44.5. Expectations barometer rose to 54 during September from 52.4 in August. Present-situation gauge fell to 32.5 striking lowest seen since January, from 34.3.

"This new market-wide circuit breaker together with the other post-Flash Crash measures is designed to reduce extraordinary volatility in our markets," said SEC Chairman Mary Schapiro in a statement. U.S. securities regulators proposed to tighten practices for halting all U.S. stock trading in the case of a massive slide in prices, after current limits remained far out of reach during market-shaking events like the May 2010 "flash crash." The Securities and Exchange Commission additionally proposed tying such market-wide circuit breakers to the Standard & Poor's 500 stock index instead of the Dow Jones Industrial Average, after multiple exchanges called for a broader-based reference point for the stoppages.

Plans to expand the scope of the euro-zone bailout fund beyond what European leaders agreed on in July, was reported as ruled out per a German government spokesman. A spokesman for German Chancellor Angela Merkel, Steffen Seibert said the European Financial Stability Facility should look exactly as the plan set out on July 21. “I think more than anything that it’s Merkel’s commentary; she seems more open to supporting Greece, looking at the region as a single unit,” he said, referring to Tuesday’s meeting in Berlin between German Chancellor Angela Merkel and Greek Prime Minister George Papandreou. There were no plans to expand the EFSF any further, per Spanish Finance Minister Elena Salgado. Its reported that officials may be close to be developing a program to backstop the European banks and that the European Central Bank could consider cutting rates.


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