Volume is 10% of its normal last week. The current rallies in these commodities and futures should be cautiously approached because of the difference in bid and ask spreads. Also, large moves in futures on low volume are not to be trusted. When volume returns to normal (whatever that turns out to be with the absence of large speculators) we may see a sizeable retreat from present levels. The US Dollar value should continue to influence the value in these markets. Increasing dollar strength should equal a retreat in commodity prices.
The “easing of policy” which means an interest rate reduction is expected today! “Quantitative Easing” (the term now being thrown around as if everyone knows what it means) means the Fed will buy long term Treasury notes ( I guess they mean the “Long Bond” or 30 year US Bond) to force the interest rates closer to the “it’s so low there’s no value in it any more” area.
Perhaps this “easing” will force investors to drop the notes and reinvest in equities or something else causing the markets to rise and create a short term bull market somewhere. Perhaps housing will boom! Unqualified borrowers will be able to get loans for more money than appraised value at short term lower-than-sustainable interest rates. Hooray! We’ll be out of the recession with many more jobs created (especially in the future foreclosure departments). What a relief! That’s the meaning of the Fed’s actions, right?
With all this easing, we must be on Easing Street!
