READING THE MINDS OF THE FEDERAL RESERVE

Reading the minds of the men behind the Federal Reserve is not too difficult. 

You have four options to choose from.

They are found buried in the Fed's website.

#1 is the safest bet.

FED APRIL MEETING POSSIBLY 'LIVE'

I love the way the Feds communicate. It's a tough job. They can't give away the game too much but yet, enough to make sense of the volatile environment.

Thus, Yellen is keeping the possibility of the April meeting open to a press con. 

Read more here. 

SIBOR KILLS

The financial world does not seem that pleasant beginning last week and early this week. Markets tanked much more. Sentiments dropped. 

Something more worrisome on the home front for people with loans. Especially home loans.

The date to watch is 17 Sep 2015, US time where FOMC meeting with a press conference is slated. 

I think 25bps by Yellen would kill it. 

FEDERAL RESERVE FUNDS RATE TARGET

The Wall Street Journal wrote about the US Federal Reserve's challenge in communicating its plan for the path of rate increases till end-2017.

But chief among my main concerns is the difference between market expectations and the Fed's projections. More than 100bps in end-2017!

Of course, no one party could be right. But what you do in reaction matters.

Cheerios.

HEAT MAP

These two maps of the financial world came along my news streams this morning.

I wonder what's USA's move in two week's time?

SINGAPORE SAVINGS BOND...THE NET EFFECTS

The Monetary Authority of Singapore (MAS) has released more information on the Singapore Savings Bond (SSB). I will leave you to click on the link to find out more about the SSB.

But what's the effects of issuing such bonds?

1.  Another debt instrument is launched to borrow from the public. This time, aimed specifically at individuals, made easier to procure and with 'safeguards' to assure the retail investor.

2.  As suggested by the Business Times article, the SSB would give fixed depos a run for their money. I think it will also grab some share from the ordinary savings accounts, dividend yielding counters on SGX and perhaps even some ETFs. The example cited in the SSB link mentioned a range of 0.9 to 3.3% returns...averaging 2.4%. It should be close.

3.  Banks will likely react. Stocks may drop further to increase their yields and attractiveness.

4.  Will MAS raise rates sans the Feds? Maybe?

BORROWERS UPSET OVER HIKE IN MARGIN FOR SIBOR LOANS

The Straits Times' Money section had the following headline boldly emblazoned on page C5 this morning: 'Borrowers upset over hike in margin for Sibor loans'. 

The article goes on to explain that the anger was directed to the larger spreads and subsequent increase in payments to be borne by the borrower.

CASE felt that the increase in spreads should be clearly explained and justified by the banks in question.

Citibank seemed to have caved in slightly at the end of the article by making some concessions. I wonder if they were under any duress then.

But in any case, that's how banks make money from the retail borrower. Scalping you via the spreads. 

Perhaps it is time to refinance or reprice for some of those who took up loans in 2010 and 2011. 

The swinging good times of cheap credit is ending. Yellen reiterated that it would be sometime in 2015. 

YELLEN YELLEN YELLEN

Just when I was writing about how some CEO/Chairman had balls in my last post, Janet Yellen decided to do the opposite last night.

Cautious optimism is how the financial Twitterverse is terming it.

Here's how I am seeing it, rate hikes would be gradual. Very gradual. Stocks will still push upwards ala 2003 - 2007. Countries are taking turns to ease. Kick the can further down the road. 

How would you trade this tape?

SIDEWAYS

The past 12 months have seen an upswing in local and foreign equity markets. By foreign I mean USA, European and Asian ones.

I suspect markets have been pumped in the last one year for institutions to offload at their convenience. It does not help that ECB has started on their bazooka move of QE. But it is still early days as to whether it is any effective.

I see next week's 18 March FOMC meeting as crucial as market watches look to the FEDs for signals to raise rates. However, I am of view that most people are looking to the wrong thing. Interest rates will rise, it is only a matter of 'when'. To me, it does not matter if it is June or Sep 2015. I am not going to trade the markets in those three months of respite if rates rises only in Sep. 

I will just sit pretty and watch the slide.