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Sunday, March 15, 2015, Chaitra 1, 1421 BS, Jamadi ul Awwal 23, 1436 Hijr


Investors in 'patient panic' over Fed language
Published : Sunday, 15 March, 2015,  Time : 12:00 AM,  View Count : 16

March 13: Forget the 2013 "taper tantrum."U.S. stock markets are in the midst of a "'patient' panic" ahead of Wednesday's Federal Reserve statement, when many investors expect a change in the Fed's language that would send the clearest signal yet that a rate hike is coming soon.
The S&P 500 has fallen 2.6 per cent since February's stronger-than-expected jobs report a week ago boosted expectations for an interest rate increase as soon as June.
Stocks may fall further if Fed Chair Janet Yellen drops a pledge to be "patient" about rate hikes in the Fed's statement after the upcoming policy meeting. Most economists expect her to erase that word as a precursor to starting rate hikes in June, according to a Reuters Poll.
Fed fund futures contracts, however, show futures traders still expect the first increase in September, putting just 19 per cent odds on a June rate hike, compared with a 58 per cent probability for September, according to CME Group FedWatch.
With inflation still low, many stock investors are still not ready for a June hike. This may change Wednesday, said Torsten Slok, chief international economist for Deutsche Bank Services in New York.
"Next week if she does remove 'patient' they could get the wake-up call," said Slok, who sees stocks selling off further in what he calls the "patient panic."
Some strategists see the market's decline as a short-lived speed bump because the strength of the U.S. economy that would trigger a rate hike will ultimately help drive stocks up.    ?Reuters








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