The fed can rock the markets. They know this and act accordingly. Which includes rocking them when needed. They rarely act between meetings and without notice but when they want the markets to get the message, the move in-between meetings. They did this when the markets were dropping after the dot com bubble. They wanted the markets to recognize that they were lowering interest rates and were not unaware of the situation so they cut between meetings and the market jumped but only short term. It still continued to descend over the next months but slower and much more controlled.
All posts by Dr. Douglas Rice
U.S. treasuries
I read today that Japan bought $68 billion in U.S. treasuries, in January alone! I wish I had a customer like that!
Strong dollar, weak dollar
Just because the Financial Times is a wonderful publication worthy of as much praise as I can give it, doesn’t mean you don’t have to think about what it is saying. I just clicked on the top story. Its about the falling dollar and in it it says, “On Friday, John Snow, the US Treasury secretary, maintained that the US supported a strong dollar, and added the familiar rider that, the determination of exchange rates is best left to the market.” Does that mean the US has a strong dollar policy? Well if you weren’t thinking, or didn’t understand what they were saying, you could argue that the US does have a strong dollar policy, after all that is what the Treasury secretary said. To the casual observer that would be enough. But to the more knowledgeable, the second part is the key. The administration can say the have a policy all they want but their actions are the only thing that counts. And as they clearly report the actions are non-existent. They say strong dollar, they act weak dollar. So which policy is it? The verbal or the physical.
Dr. Douglas Rice 