Latest Hilsen-Rumor Put Cherry on Equity Rally
After last night’s thrashing on the TOCOM which saw the Nikkei 225 drop 843.94 points to close at 12,445.38 (or minus 6.4%) the US equity markets were looking at another potentially ugly day. But the Yen abruptly stopped appreciating and began turning back toward Â¥95, which it achieved just before the publication of the latest article by known Federal Reserve mouthpiece John Hilsenrath at the
War Wall Street Journal.
The rising Yen supported equity prices all through trading as bond prices were under some siege after a miserable 30 year U.S. treasury auction.Â But, mostly, the market was rising because after three days of selling and bond yields that could not break through long-term resistance there was the feeling that there would be supportive news from the Fed.Â Remember, folks, all talk of tapering off bond purchases is simply a mechanism to move the markets where the Fed wants them to go in the near-term.Â But, there is no chance for the Fed to actually go through with a real end to QE. This is about moving other markets in the direction the Fed wants while creating maximal benefit for the New York banks that it works for.
So, after the bond vigilantes woke up just enough to call the Fed’s bluff on tapering QE, a Hilsen-rumor makes its way into the market at 3:30pm to put a cherry on top of this cake.Â Anyone reading a chart of the 10 year U.S. yield could have predicted this.Â It’s not rocket science.
The S&P 500 closed up 23.84 to 1636.36 (1.5%) and bond yields sank like a rock on the
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.
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