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Weekly Market Commentary
25th March 2012
Provided by TA Knowledge
Welcome to the Weekly Market Commentary from DGCX, providing you with a snapshot of what's happening in the energy, precious metal and currency futures markets.
The commentary and analysis included in the DGCX Weekly newsletter is provided by TA Knowledge, a leading UK-based provider of news and intelligence.
Please note that the observations and views expressed in this newsletter do not reflect the views of DGCX and are solely the view of the writer (TA Knowledge).
Economic Data Overview
For a long time traders knew where the boundaries were in terms of the main drivers behind directional sentiment, but now that has begun to change. The outlook for the US economy is at the centre of this dilemma. In the last week, the Fed chairman has continued to stress an accommodative narrative and his concern is that household spending needs to increase in the US to help the economy recovery. He has also spoken about the need for further initiatives to address the European crisis, particularly within the banking system, where he believes external balances need to be reduced to spur growth and competitiveness. However, at an Asian investment conference, the St Louis Fed President, James Bullard, stated that US monetary policy may be at a turning point. His focus is on the increased risk of inflation and the difficulty in managing a trend in higher prices, by boosting the economy for too long when the signs of recovery are becoming more apparent with every new month's economic data. His view is closer to the interest rate forward market which anticipates an increase in the US rates between the third and four quarter of 2013 instead of the 2014 projection that Ben Bernanke has forecast.
The major global stock market indices' posted their worst weekly performance of 2012 last week. However, as many of the stock markets have not had a down week in the year so far, aside from last week, that headline in financial news wires is far from ominous. History suggests that the risk of inflation and economic recovery is often best represented by stock market investors, who are looking to future growth rather than current conditions. In the latter stages of most economic down turns stock markets regularly post new highs. Last week, more investment analysts joined the bullish camp and suggested that it was a good time to leave defensive equity holdings and look for growth stocks that will perform as the US economy continues to strengthen..Read more
