Fed is Main Focus But Europe, Energy and Asia on the Radar

The Fed has always been a shortcut for discussions of financial market developments. So, the argument goes, liquidity is drying up for high-yielding assets because the Fed is allegedly poised to raise the federal funds rate by 25 basis points. And then, it’s anybody’s guess what they will do next.

The price of oil (WTI) crashing to $35.62 on Friday is also seen as an ominous stock market event, despite the fact that the crude’s 44 percent decline from the year earlier is a huge bonus to consumers’ real purchasing power. That is what some analysts think of a great gift from the Saudis and the Russians, whose onshore marginal production costs ($3 and $13 per barrel, respectively) still allow them to make money while driving high-cost competitors out of the market.

These views are puzzling. The declining demand for high-yielding assets, for example, simply means that they are not offering adequate risk-adjusted returns.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza