Wednesday, November 3, 2010

QE2 policy minutes to decide global market direction

Dalal Street might open marginally in the green, discounting the 25 bps Repo and Reverse Repo rate hike from RBI.

Wall Street closed up on Tuesday on anticipation of the stimulus that has helped fuel a rally of nearly 12% in the Dow since the end of August as well as a swoon in the dollar. The dollar continued to slump on Tuesday.

Asian markets are trading flat to positive on Wednesday morning.

Soverign Debt - Staging a come back ?

The debt crisis that shook the world six months back seems to be back in the reckoning. On Tuesday, Irish credit costs surged to a record high and bond prices tumbled. Credit-default spreads, popularly called as CDS for Irish sovereign debt jumped 22 basis points to 5.20 percentage points, and hit 5.30 percentage points, a record high.

Lets get our heads turned towards Europe in the coming days.

RBI delivers, Will US Fed deliver ?

All eyes will be eagerly watching Ben Bernanke's policy decision after 02:15 PM EST. Fed is expected to announce a new program of bond buying, known as quantitative easing (W'Street is referring to this policy as QE2), because they are worried the economy could slip into deflation.

DStreet US Analyst Satish Bhogadi says "We expect the Fed to lend helping hand for one last time i.e using QE2. Stock markets might see another rally. Though interest rate futures suggest US might not raise rates till 2012, we believe there is a surprise in store in the first half of 2011."

Expect a positive session today