Monthly Archives: December 2015

Market Commentary: Market Recap

U.S. equity markets tumbled for the second day in a row following an expected Federal Funds Rate hike announcement by the Federal Reserve on Wednesday. The Federal Reserve raised the Federal Funds guidance rate up 25 basis points to a range of 0.25% – 0.50%. This rate hike was widely expected by economists and financial markets initially rallied following the announcement as many investors believe this was a signal that the U.S. economy is on firm footing. However, this optimism was quickly quelled by concerns that global growth may continue to slow down in the coming quarters, primarily due to fears of a slowdown in China. Oil also continued to move lower this week and most commodities also dropped. With all of this recent negativity surrounding oil and commodity prices, a “Santa Claus rally” would be more than welcomed by many investors. Continue reading

All Eyes on the Fed (again)

The Federal Open Market Committee (FOMC) will meet on Wednesday, December 16th. Despite the pullback we have seen in the markets this week due to falling commodity prices, it seems very likely the Fed will raise interest rates. In a survey done by the Wall Street Journal, more than 97% of economists polled stated they believe the Fed will raise rates. The Fed-funds futures are pricing the “odds” of a rate hike at 85%. Most economists have cited the “readiness” to get the first rate hike out of the way and actually feel it would damage the Fed’s reputation if they do not raise rates. Continue reading

ECB Stimulus Disappoints

The European Central Bank (ECB) announced on Thursday that they would “step up” efforts to boost the eurozone economy. This included increasing bond purchases, as well as cutting already negative interest rates by 0.1% (the bare minimum). This shook global markets yesterday, as investors worried these measures are simply not good enough to boost low inflation in the eurozone and jump start the economy. U.S. and European stocks fell on the news, but the more telling moves came in the bond and currency markets. German bond yields jumped their highest amount in months and the euro rose against the U.S. dollar. The market seemed to be expecting Draghi to continue his “under-promise, over-deliver” ways, so when he just “delivered”, the markets reacted sharply. Continue reading