John Dobosz, Forbes Staff
After a two-day meeting, the release of the Federal Open Market Committee’s statement at 2:00 on Wednesday unleashed a frenzy of buying in stock markets all over the world. The Fed bullishly surprised the market with its decision to maintain the current pace of buying $40 billion of agency mortgage-backed securities and $45 billion in longer-term U.S. Treasury securities per month.
The Fed keeping the petal to the metal in this latest round of asset purchases promises to keep interest rates lower, for now. They tumbled today, with the yield on the 10-year Treasury note plunging to 2.71% after the announcement from 2.90% earlier in the day.
The no-taper news added a quick 100 points to the Dow Jones Industrial Average and the rally was especially feverish in the emerging markets, and in anything commodity-related: steel, coal and especially metals. Gold is up 4.4% from today’s $1,300 low, thanks to the Fed’s statement. Gold tends to move higher when real interest rates (nominal rates minus inflation) are going lower, and that’s what happened today. Check out the spike in gold at 2:00 p.m.
Read the full story at FORBES.
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