Wednesday, 27 May 2009

More evidence of the Fed's double bind

Just a suspicion but there could be a big vacuum under global equities at present.

The Fed cannot afford to turn a blind eye to the Treasury market and the dollar – so if it comes down to a hard choice it will be a case of managing the news flow to create another flight to quality.

The markets will not let up on testing this until they get a clearer signal from the Fed that the time to keep propping up equities has come and gone.

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