"...given the now highly stimulative stance of monetary and fiscal policy and well-anchored inflation expectations, the
Committee concluded that economic fundamentals are such that situations requiring special policy actions are most unlikely
Source: Testimony of Chairman Alan Greenspan
Semiannual monetary policy report to the Congress
July 15, 2003
10-Year T-Note Futures, 10-minute Chart
The T-Note futures dropped like a rock yesterday after Greenspan testified that no "special policy actions" (i.e.
buying bonds to prevent any rise in long-term rates) would be taken by the Fed. That news knocked the stuffing out of the
market! It's not every day the T-Note has a range that large... folks on the wrong side of that move felt some pain, the financial
equivalent of getting hit by George Foreman.
Dollar Index Futures, 10-minute Chart
The dollar jumped strongly. It's strange but I haven't heard anyone yammering about the Euro going to 1.35 these days, which is
all I heard as the Euro
topped out at the end of May.
Gold Futures, 10-minute Chart
Given the inverse correlation of the dollar and gold, which I've written about before, it was no surprise when gold fell hard yesterday.
I'd put the protective buy-to-cover stop above 349 since the short got filled at 346, risking around 3 points. I don't know how much
lower gold is going to move; you just have to trail your stop as best you can.
It's fun too watch these intermarket relationships in action, assuming of course that you happen to be positioned on the right
side of the move. If I were long notes, short the dollar, and long gold I'd be singing a different tune.
If I ever lay my hands on a dollar again
I'm gonna squeeze it till the eagle grins
Nobody loves you when you're down and out
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