This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Global Macro: Markets Await Federal Reserve Answers

NEW YORK ( TheStreet) -- Markets remain fairly muted in the days leading up to the release of the Federal Reserve minutes on Wednesday. In recent weeks, board members of the Federal Reserve have come out touting that there may be a need to rein in current easing measures. Although markets have entertained the idea, it seems unlikely that the Fed opts for such action. The recovery is going as well as anyone could have hoped, and data are just beginning to look up. With the economic landscape teetering on an edge, the Fed is unlikely to pull the carpets out from underneath.

A major catalyst to the current run higher has been fueled by the widely known Bernanke Put. This is merely a euphemism for the idea that the Federal Reserve is actively providing enough liquidity for financial markets to continue their rise higher, even in the face of tepid economic growth.

The chart below is of the S&P 100 Index Fund (OEF) over the S&P Equal Weight ETF (RSP). This pair looks at larger-cap stocks in the S&P 500 index and whether the market is positioning in a defensive nature. This week, the pair has been biased slightly to the upside as markets have been left uncertain to the future value of the dollar. The pair will either propel higher, if the minutes show the possibility of removing simulative policy measures, or continue lower, if policy should be left in place.

The next pair is of the Barclays TIPS Bond Fund (TIP) over the Barclays 7-10 Year Treasury Bond Fund (IEF). This pair measures inflation expectations and whether future rates are at risk of rising. The pair has continued its trend toward multi-year lows, which signals to the Fed that more easing is possible.

The focus should not be on rising rates, at this point; rather it should focus on solving the employment picture. Long-term unemployment and discouraged workers remain an issue, and furthering the monetary easing measures should allow for growth to continue its gradual trend higher. With fiscal policy not doing its part in aiding the recovery, it remains unlikely that Bernanke will similarly remove the little he has left to offer markets.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs