Credibilty
19th January 2009
The Dow has had a 250 point swing during the electronic session (so far). Last night, the Dow was +130 and now it is -100. The market will not like the RBS news. RBS is currently -50% on the news of a much larger than expected (and record) 42 billion dollar loss.
More importantly, interest rates are not doing what would be expected. Yields are screaming higher at the moment. I think what could be happening(and lets hope not) is that the Fed is starting to lose credibility. I think the market is starting to realize that the quantitative easing that the Fed has been swinging over investors heads to drive long rates lower is just that, hollow promises. How can the largest debtor nation in the world, and therefore the largest issuer of bonds, also buy the same bonds back? All markets close at 1:00 Eastern.
BA
