World Markets Today: Undecided about the Fed

21 Oct, 2013 (8:58AM IST)

Oct 20, 2013, (11:25 PM EDT)

Welcome back to the first session of a very thrilling week in world markets!

The Fed is back, so is taper/ non-taper talk and some talks about central bank interest rates. That’s called confusion confounded, eh? 🙂

World markets are uncertain about the Fed’ plan about tapering its QE3, which was supposed to happen last month, but didn’t . Will it happen this month of the recent shutdown of the U.S. government push it forward to March, when the next debt ceiling battle will be fought?

Nobody is sure and this uncertainty is being reflected in various sectors of world markets. Gold is trading slightly positive (basically hovering near its resistance) on hopes of no-taper. The Dollar index is also trading slightly positive on hopes of tapering. In bond markets, European bonds are positive on no-taper hopes and U.S. bonds are negative on tapering fears.

Asian markets are trading higher as yes has fallen against USD. In fact, Dollar is trading high against all other major currencies.

SGX Nifty has opened and jumped nearly 30 points up as emerging markets like India will benefit if the Fed continues its stimulus.

Reports about the U.S. economy will be in focus early this week. Today, U.S. markets will receive Existing Home Sales data and tomorrow, the unemployment numbers will be released.

World markets would like these reports to be lower than expected so that the Fed’ taper-talk could be pushed away at least till next month.

So which way markets will trend?

Personally, I have stopped looking at indexes and will check the closing levels of U.S. indexes only AFTER the Fed’s meeting is over. That will be the day of decision for markets and till then, I’m going to stick only with stocks. As markets will trade on news, rumors, assumptions and whims of big fund managers, indexes will be highly volatile and unsafe bets.

So for me, it’s going to be stocks, stocks and stocks in both directions.

Expect markets to be volatile and mostly range bound, at least till tomorrow. Bond markets, Gold and the Dollar index will be in focus, equity indexes will follow cues from these segments of world markets.

Real action is expected in U.S. markets later today, world markets will merely wait for the return of the big, bad boss 🙂

That’s enough on start of a Monday, which like all other Mondays promises to disappear in seconds.

So I’ll see you “after a few seconds” when U.S. markets open (*hehe*).

Till then, good luck, have a great day and enjoy the session in markets today!

See you later.

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