U.S. Stocks Drop, Dollar Rises on Fed Forecast
By Rita Nazareth and Cecile Vannucci – Jun 22, 2011
… well, the fed melakukan EXIT STRATEGY dari program stimulus yang sudah berlangsung 2 kali (QE1 dan QE2)
… alasan utama adalah, amrik sudah keluar dari resesi (pertumbuhan ekonomi negatif 2 kuartal berturut-turut) dan INFLASI
… situasi ekonomi amrik yang diekspektasikan dalam 2011 ini: angka pertumbuhan positif kecil (di bawah 3%) dan INFLASI lebe dari 3%
… melihat kondisi ke depan ini, maka analisis gw secara ekonomi adalah suku bunga simpanan / pinjaman akan bergerak naek untuk menekan harga komoditas, terutama energi
… imbas kenaekan suku bunga maka us dollar bisa bergerak naek juga
… namun the fed MASEH PUNYA SENJATA ANDALAN: kebijakan perbankan dalam hal simpanan, terutama OBLIGASI, jadi akan terjadi TARIK MENARIK antara suku bunga perbankan dan yield/imbal hasil obligasi (Treasury)
… dolar amrik yang KUAT akan diberlakukan, namun cukup s/d ekuilibrium saja
… ekuilibrium itu terjadi saat INFLASI terkendali pada kisaran di bawah 3%
… jika angka pertumbuhan ekonomi kembali di atas 3% akibat PEMULIHAN DOLAR AMRIK UNTUK MENEKAN INFLASI, maka ekspektasi pertumbuhan ekonomi global juga bisa bergerak naek di atas 2%, dan ini BERITA BAIK bwat investor global
… well, gw seh bukan ekonom, jadi liat aja dah 🙂
U.S. stocks declined, breaking a four-day rally, after the Federal Reserve lowered its economic growth forecast and said it will complete a $600 billion bond- purchase program as scheduled this month. The dollar rose, and oil climbed following a decrease in inventories.
The Standard & Poor’s 500 Index fell 0.7 percent to 1,287.14 at 4:00 p.m. in New York, and the Stoxx Europe 600 Index dropped 0.6 percent. Ten-year U.S. note yields were almost unchanged, holding below 3 percent for a sixth day. The Dollar Index advanced 0.4 percent while the euro fell 0.5 percent to $1.4344. The pound weakened after some Bank of England members said more stimulus may be needed.
The S&P 500 halted its longest streak of gains of the month, having risen 2.4 percent over the past four days in a rebound from an almost three-month low. Stocks lost ground after Fed officials reduced their economic-growth projections, with much of the decline in the final hour of trading. The Fed, in a statement after a two-day policy meeting in Washington, left its benchmark interest rate in a range of zero to 0.25 percent and repeated a pledge to keep it there “for an extended period.”
“There was a bit of disappointment that the Fed downgraded their forecasts,” said Brad Sorensen, director of market and sector analysis at San Francisco-based Charles Schwab Corp., which has $1.7 trillion in client assets. “The ‘extended period’ language can’t be more specific because they don’t know what the economic data is going to be. There’s no way to know what happens over the next three months. So, there’s no way to know what policy will be in three months.”
Fed policy makers said they will maintain record monetary stimulus to support the flagging economic recovery after completing the bond-purchase program. “The economic recovery is continuing at a moderate pace, though somewhat more slowly than the committee had expected,” the statement said. “The slower pace of the recovery reflects in part factors that are likely to be temporary,” such as supply chain disruptions stemming from the Japanese disaster in March.
Fed Chairman Ben S. Bernanke said at a press conference in Washington that the central bank can take additional actions to stimulate the economy “if conditions warranted.” Potential tools, which have risks or costs, include additional securities purchases or a reduction in the interest rate on excess bank reserves, Bernanke said.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said in a Twitter post this morning that the Fed “will likely hint” at interest caps and QE3 — a hypothetical third round of quantitative easing, which would involve the purchase of assets — during its August meeting in Jackson Hole, Wyoming.
U.S. equity futures briefly trimmed losses before the open of exchanges after earnings from FedEx Corp. (FDX) signaled that global shipping demand is improving. FedEx shares rallied 2.6 percent.
The Stoxx Europe 600 Index’s decline followed the gauge’s 1.4 percent advance yesterday, its biggest gain in two months. Royal Philips Electronics NV, the world’s biggest maker of light bulbs, tumbled 8.8 percent in Amsterdam trading after saying it will need to deepen cost-cutting to combat deteriorating demand for lighting and consumer electrical goods such as headphones.
Greece’s government won a vote of confidence and needs parliamentary approval next week for 78 billion euros ($112 billion) in budget cuts to prevent default.
The yield on the 10-year Greek bond fell 17 basis points to 16.81 percent, while the similar-maturity Irish yield advanced 31 basis points to 11.71 percent. The two-year German note yield slipped five basis points to 1.48 percent, dropping for the first time in four days. The Markit iTraxx Financial Index of credit-default swaps protecting the senior debt of 25 European banks and insurers climbed seven basis points to 161, according to JPMorgan Chase & Co.
The European Financial Stability Facility started selling 3 billion euros ($4.3 billion) of bonds due December 2016 to help fund euro-area nations’ contribution to the bailout of Portugal, according to two people with knowledge of the matter. The notes may be priced to yield about seven basis points more than the benchmark mid-swap rate and the issue is scheduled to be completed this week, said the people.
Crude oil rose for a third straight day, rising $1.24 to settle at $95.41 a barrel in New York as the U.S. Energy Department said stockpiles declined by 1.71 million barrels in the latest week. Inventories were forecast to drop by 1.83 million barrels, according to the median of analyst estimates in a Bloomberg News survey.
The MSCI Emerging Markets Index climbed 0.3 percent, for its first back-to-back gain in three weeks, as South Korea’s Kospi Index (KOSPI) jumped 0.8 percent. Dubai’s DFM General Index (DFMGI) retreated 1.8 percent after MSCI Inc., whose stock indexes are tracked by investors with about $3 trillion in assets, delayed to December its decision on whether to raise the United Arab Emirates and Qatar to emerging-market status.
The pound depreciated against all its 16 major counterparts. Bank of England officials voted 7-2 to keep interest rates on hold this month, with some warning that the economy is weakening. The BOE’s Spencer Dale and Martin Weale continued a push for a quarter-point increase in the benchmark rate. Governor Mervyn King and the other six members of the Monetary Policy Committee, including Ben Broadbent, voted for no change. Adam Posen kept up a call for more bond purchases.
Fed to Maintain Record Stimulus After Ending Bond Purchases
By Craig Torres and Jeannine Aversa – Jun 22, 2011
Federal Reserve officials decided to keep the central bank’s balance sheet at a record to spur the slowing economy after completing $600 billion of bond purchases this month.
“The economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the committee had expected,” Fed Chairman Ben S. Bernanke said at a press conference after a meeting of the Federal Open Market Committee. Bernanke and his colleagues on the panel cut their growth forecasts for this year and next and raised their estimates for the unemployment rate, driving stocks lower.
Bernanke said that unemployment, now at 9.1 percent, will come down “very painfully slowly” even after the pace of economic growth picks up starting in the second half of the year. Some of the reasons for the slowdown, such as higher commodity prices and supply-chain disruptions caused by the March earthquake and tsunami in Japan, will be temporary, he said. Others, including declines in home prices and financial- sector weakness, may be more long-lasting.
“Some of these headwinds may be stronger and more persistent than we thought,” Bernanke said. “We don’t have a precise read on why this slower pace of growth is persisting.”
Stocks fell, ending a four-day rally. The Standard & Poor’s 500 Index declined 0.7 percent to 1,287.14 at the 4 p.m. close of trading in New York. The yield on the 10-year Treasury note was 2.98 percent, little changed from late yesterday.
Bernanke said the Fed has options to further stimulate the economy, such as undertaking additional bond purchases or strengthening its commitment to holding rates lower for longer.
“They have their own costs,” he said. “But we’d be prepared to take additional action, obviously, if conditions warranted,” he said.
At the same time, he stressed that the economy has improved since last August, when he first indicated that the Fed might embark on a second round of large-scale asset purchases to stave off the threat of a broad-based decline in prices.
“The current outlook is significantly different than what we were facing in — in August of last year,” he said. “We no longer have a deflation risk.”
Bernanke is keeping his options open on the Fed’s next step, said Jerry Webman, chief economist and senior investment officer at OppenheimerFunds in New York.
On the Horizon
“It’s pretty clear that they don’t see anything on the horizon that would get them to adjust policy one way or the other,” said Webman. “There has got to be a wait-and-see period to see what effects some of these temporary exogenous factors will have.”
The Fed left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008, and repeated a pledge to keep it there “for an extended period.” The decision was unanimous.
In his press conference, Bernanke said an “extended period” means the Fed would maintain rates at low levels for at least two or three meetings. The Fed meets eight times a year.
“The thrust of extended period is that we believe we’re at least two or three meetings away from taking any further action,” he said. “And I emphasize at least. But depending on how the economy evolves, and inflation and unemployment, it could be, you know, significantly longer.”
The Fed will aim to keep the domestic securities holdings in its System Open Market Account at about $2.654 trillion, according to separate a statement today from the Federal Reserve Bank of New York.
“They want to keep as accommodative as possible for as long as they can to hopefully add some juice to the economy and raise demand until the recovery is on a firmer footing,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “They acknowledged economic conditions have deteriorated since the April meeting.”
The U.S. economy grew at an annual rate of 1.8 percent in the first quarter, down from 3.1 percent in the fourth quarter of 2010, and recent data have shown manufacturing and consumer and business sentiment weakening.
Fed governors and regional-bank presidents now say the economy will expand by 2.7 percent to 2.9 percent this year, down from April’s forecasts of 3.1 percent to 3.3 percent, based on the median range of projections. Growth in 2012 will range from 3.3 percent to 3.7 percent, compared with forecasts of 3.5 percent to 4.2 percent in April, the Fed said.
Central bankers raised their forecast range for the U.S. unemployment rate to average 8.6 percent to 8.9 percent in the fourth quarter of 2011, compared with projections of 8.4 percent to 8.7 percent in April. For the fourth quarter of 2012, the rate will average 7.8 percent to 8.2 percent, versus prior forecasts of 7.6 percent to 7.9 percent.
Inflation excluding food and energy prices will range from 1.5 percent to 1.8 percent this year, the projections today showed, up from 1.3 percent to 1.6 percent in the April forecasts. That’s based on the Commerce Department’s core personal consumption expenditures price index.
“Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate,” the statement said.
Bernanke said on June 7 that policy makers will “closely monitor” inflation, while predicting that price increases will ease in the medium term. The consumer price index rose 3.6 percent for the 12 months ending in May, the most since October 2008, as food and fuel prices drove the benchmark higher. So- called core CPI, the index excluding food and fuel, rose 1.5 percent during the same period, the most since January 2010.