01-30-2014 06:46 AM
Grains still trading back and forth with no real conviction. A decent sell off of sorts yesterday in beans and wheat but in the scheme of things it's just white noise.
Corn up 1, beans down 3 and wheat up 4.
Wheats overnight bounce is from a 42 month low. That's 3.5 years....I think. Wheat was down 30% in the past year on expectations of a record world output.
The Fed decided to continue with its plan of tapering. They are tapering on expectations of an improving US economy. I think that's BULL. They are ultimately going to blame their taper tantrum on the fact that it is a failed economic policy. They gave us the best piece of bad news yesterday and stuck to their plan. If they decided to pull back from the taper, it would have been even worse in the equity market. As it was, we were down almost 200 in the Dow.
So here we are with a small bounce in equities this morning. Gold bugs bought the metal on Armageddon fears with the Dow down big. Today, gold has backed off to $1255.49, down $11.75. Oil is up .47 cents to $97.83.
Which brings me to the 10 year yield. Just as the inflation hawks got way out in front of any perceived inflation and drove gold up to $1900, strong economy hawks got out in front of the 10 year and drove yields to 3.00% with the talking heads looking for 3.5% and some even 4.00%. Oops. That hurts. Today the 10 year is at 2.70% and I think it's on its way to 2.50% and then 2.25%.
Deflation dead ahead.
01-30-2014 07:07 AM
Yes, that $10B/mo taper was sticking a big toe in the water and they see what happens to equities. Wall Street is saying "real cute! but bring back the juice!!". Inflation isn`t the worst thing in the world, but once you start going down that waterfall, there`s no changing your mind
01-30-2014 12:22 PM
01-30-2014 04:17 PM
Interesting thing is that the fed is reducing the amount of extra money they were pumping into the financial system -- it's not like they are starting to take the money out of the system.