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UPDATED FED: The Fed Surprises, But Softens The Blow

Thursday December 19, 2013 09:04

The Fed modestly reduced its bond purchases by $10 billion, but, stressed that its Fed fund target rate was promised to be held at historic lows for the balance of 2014. The first reaction for the metals was a large sell-off, but after analysis, the Fed is still aggressive in the short term, with liquidity and interest rates expected to remain near zero for another year.

It will be difficult in 2014, as the Fed tries to dig itself out of the monetary quagmire caused by massive liquidity injections. At best, the Fed will have no choice but to graduate the pullback on bond buying, while keeping an eye on the bond market, which on the long end has implosion possibilities. Looking at 2014, I suspect when it is over the worst job in the world ranking will be that of the Federal Reserve Chairman (sorry Chairwoman). Yellen actually wants the job.  Good thing her hair is already grey.

By Peter Hug
Global Trading Director
Kitco Metals Inc.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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