Wednesday, February 24, 2010
U.S. stock indices are trading flat this morning ahead of the U.S. opening. Investors seem reluctant to take a side ahead of today’s testimony by Fed Chairman Bernanke. Today’s
emphasis will be on jobs and the Fed’s exit strategy. Bernanke may be asked to explain how the Fed plans to withdraw stimulus and raise interest rates without shocking the financial markets. Dovish
comments by Bernanke are likely to decrease demand for higher risk assets while putting pressure on equities. Hawkish comments, or hints at a rate hike this year could also trigger the start of a
sizeable correction. The only thing investors can count on today is volatility.
Trading has been mixed overnight in the Treasury markets following a strong rally on Tuesday. Yesterday, investors bought T-Bonds and T-Notes after the release of less than stellar
U.S. economic reports. Today, traders will react to any comments by Bernanke regarding interest rates. Talk of tightening will pressure March Treasury Bonds and March Treasury Notes.
If Bernanke’s testimony helps the Dollar then look for more pressure on Gold and …