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CREDIT MARKET
With employment trends causing an economy to face a possible depression and credit conditions worsening before the second quarter earnings season, market members are bearing in mind an August rate hike from the Fed as an unlikely result. Fed Funds outlook mirror a modest 13.5 percent probability of a quarter point hike to 2.25 percent – a figure that may also make up instability in general lending conditions. In fact, the views for reduction anytime this year have dimmed. Futures show a 53 percent likelihood of no alteration at the September 16th meeting and a 31 percent possibility that the benchmark be changed in late October.
FINANCIAL MARKETS
After finishing the initial half of the year with the most horrible string of weekly losses in four years and levels at near two year lows, equity markets seemed to have found a momentary floor this past week. However, stocks are still tottering on the edge of what many analysts and market commentators would regard as a full blown bear market. The revenue forecast this past week was beleaguered by the unsatisfactory non-farm payrolls release; but a long, holiday weekend would rally round to stem the bleeding. In contrast, support may not hold up for long. Second quarter earnings are coming to the quarter and analysts are by now predicting another 11 percent fall. Commodity markets added to the relief. While agriculture prices have been dropping for a while, vital crude has just lately broke below a tight range near record highs.
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Posted on Jul-10-2008
