Will Fed Cut The Rates Again?

Financial markets seems to believe that US fed will again cut the interest rates in order to stop a housing slowdown led recession in that country. And hence dollar is seeing continous selling pressure against major currencies, and stocks along with commodities are seeing a major sharp upmove. But US fed might not go all out on rate cut spree as inflationary fears in US are still present. Therefore over exhuberance of stocks of emerging economies will have to be taken with caution, they say:- better late than never!

Falling Dollar Is Creating Asset Inflation

After US Fed had cut interest rates by 50 basis points, dollar has been falling steadly against major currencies. This will further lead to rise in other assets like commodities, stocks. Again for the past few trading sessions, gold, copper, zinc, lead, agri commodities and crude oil are rising and are at their all time highs. Stocks across the globe are rallying for the past few days. Dollar investors are pulling their money and pouring it into these assets. This is creating inflation in stocks, commodities and thus central bankers job is now much more difficult to manage inflation. This hightened levels of asset inflation does not agour well for growth and interest rates. Investors have a tough time managing their portfolio as volatility will rise along with hightened greed of market participants.

Asian Markets Are Taking A Breather Today

Today all Asian markets except China, are taking breather after moving up for the last couple of days. It seems investors and traders are back again in buying riskier assets like emerging market stocks, currencies and bonds. Crude oil is also trading below U.S.$70 per barrel mark and is a welcome sign. Yen seems to be stabalising around 116 mark against the U.S.Dollar. Agri commodities are however, ruling strong due to inevitable reason that population is growing and due to global warming, floods and other natural peril's will keep demand far more than the actual supply of these farm outputs.