Federal Reserve leaves rates on hold....

The Federal Reserve left rates unchanged today at 5.25%. This was widely expected in the financial markets. The statements were as follows:

Inflation pressures were likely to lessen due to contained expectations.

Inflation pressures are likely to moderate, partly due to less impetus from energy prices.

Economy seems likely to expand at a moderate pace in future.

Economic growth has slowed over the course of the year, partly due to a cooling housing market.

INFLATION RISKS REMAIN, EXTENT, TIMING OF ANF ADDITIONAL FIRMING DEPENDS ON EVEOLUTION OF OUTLOOK.

This last statment was key as it allowed the Bond market to rally as the Fed signaled vigilence in fighting inflation. Bottom line nothing is going to change near term. U.S. rates are on hold.

FXTRADINGIDEAS@AOL.COM

Soft Landing here we come....

The Economy is ticking along at a moderate pace and inflation is on the decline. Fear of a recession has disapated and we are now looking at a sustained period of slower growth, low inflation and stable interest rates. This plays into the themes I have been writing about for some time. Positive carry trades !!!

Sure there will be mark to market issues but these are temporay. Just make sure you do not take a position that is to big (everyones definition of this will be different). You want to be able to survive the swings and still stay in the position. I particularly like "riding the curve" in Mexico. Sell rates in the 2year sector. Short Usd/Brl is still one of my favorites as is short Usd/Ars.

I am also getting bullish on the dollar although this is for a shorter time frame. I sold Euro today and will take this one day to day.


FXTRADEINGIDEAS@AOL.COM