Bernake’s Announcement Won’t Be Good for the Market
Bernake’s initial announcement mid-month sent a positive signal throughout the market. Although it’s still not-as-liquid due to the world cup fever, the market respond positively with Dow Jones seeing its minor uptrend and so does the rest of the Asia’s regional index (although in the mid-run, the whole market is still on sideway move especially JSX).
Things might get awry with Bernake’s end-of-month interest rate announcement. Back on the previous mid-month announcement he states that The Fed won’t raise the interest rate above 25 basis point if and only if the oil price can stay below the $70 price tag per barrel.
Alas, just several hours ago the oil price just breach the $72 level per barrel. This might not be a good precedent for the whole world market as the probability of The Fed increasing the interest rate near 50 basis point is very possible.
[...] Okay, I was wrong. Bernake, the chief of America’s Federal Reserve, announced that the interest rate will only increase by 25 basis point, lower than the expected hike which is 50 basis point. This gives a clear signal to the market that things might going good. To add to that, he also delayed the interest hike for the month of August (the more the merrier!). [...]