Investing.com - Financial Markets Worldwide

Markets Stabilize As Bullard Says Fed Not That Close To Tapering

ByActionForex
Published 05/24/2013, 06:18 AM
Updated 03/09/2019, 08:30 AM
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After steep selloff earlier in the week, financial markets stabilized after St. Louis Fed Bullard said that the Fed was not "that close" to tapering the open-ended quantitative easing program. He noted that "even if we do taper, it would still be a very aggressive pace of purchases because we would only be moderating the rate by a small amount." Meanwhile, San Francisco Fed Williams said that even if the purchases would be adjusted downwards, the Fed wouldn't be on "some autopilot of moving in the same direction. That is, the Fed would ratchet the program back up if needed. The DOW closed down just -12.7 pts while Asian markets were mixed today.

BoJ governor Kuroda said it's "extremely desirable" for long term government securities to "move stably". Kuroda said BoJ will conduct market operations in a "flexible manner to head off, as much as possible, volatility in long-term interest rates". On Thursday, yield on 10 year JGB breached 1% level for the first time in a year and triggered a steep selloff in Nikkei, which plunged -7.3%. The yen rebounded strongly, but lost steam as BoJ pumped JPY 2.1T into the economy to calm the markets.

Technically, it looks like dollar has topped out in near term while yen has also bottomed out in the near term. We expect more consolidations before the week's close. So far, there is no sign of reversal in the dollar and yen trend.

On the data front, the New Zealand trade surplus came in narrower than expected at NZD 157M in April. German Q1 GDP was unrevised and finalized at 0.1% qoq. German Gfk consumer sentiment improved to 6.5 in June. German Ifo will be main focus in the European session, and is expected to be unchanged in May. U.S. durable goods orders will be featured in the U.S. session.

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