With American and Asian indices falling slightly, European index futures have been trading relatively flat across the board. This means that economic data will receive a great deal of focus over the coming days, with investors desperately searching for a boost after days of endless haggling over the debt ceiling; all of which has been to no avail.
Congressional Bickering Creates Anxiety in the Markets
At present, investors are severely lacking in confidence due to a number of factors. This means that equities in particular are appealing bearish as investors are not given a reason to invest due to doubts about risk caused by Congressional indecision.
With Congress continuing to haggle over the prospect of raising the debt ceiling, many investors are withdrawing their investments, causing companies to record consecutive days of losses. The markets clearly dislike the uncertainty over the new fiscal plan and investor concern appears high. As the weeks roll on, a partial government shutdown looks plausible and, the thought of the US government defaulting on its debt becomes realistic.
Of course, both these options appear relatively unlikely, but the longer that negotiations go on for, the more realistic the possibility becomes. With Democrats and Republicans alike continuously putting politics before the national interest anything could happen (in theory at least).
A Clear Lack of Direction:
The 1st of October deadline is fast approaching and, the continued bickering makes investing tricky in case Congress fails to pass a budget. Even last weeks decision from the Fed to leave its asset purchase program at $85 billion has proved ineffective at pushing the markets higher with investors failing to see the positives.
At present, there is also very little to distract investors from these woes, with very little else scheduled in the economic calendar.
The Impacts of the Feds Decision:
The Feds decision not to taper their asset purchase program left many investors stunned. Many now consider it to be unclear what the Fed would like to see before they start scaling back their asset purchases as the economic indicators appeared positive prior to the announcement.
Trading experts at www.alpari.com claimed that “the majority in the markets were convinced that the Fed would announce a reduction in the program last week and as a result, it was largely priced in”. For this reason, when Fed officials do speak this week, investors will be analysing their every word.
Housing Remains the Focus
The housing market appears to be the source of the Fed’s anxiety over tapering. The suggestion that tapering would happen this month have forced a rise in mortgage rates and we have also seen a rise in treasury yields. Despite a lack of evidence, many believe that tapering will have a negative effect on a housing market that has, so far at least, been the cornerstone of the recovery.
All of these factors are currently causing a great deal of apprehension among investors. In the run down to the 1st of October deadline, if we don’t see significant improvements in investor confidence, this apprehension could worsen further.
Congressional Bickering Creates Anxiety in the Markets
At present, investors are severely lacking in confidence due to a number of factors. This means that equities in particular are appealing bearish as investors are not given a reason to invest due to doubts about risk caused by Congressional indecision.
With Congress continuing to haggle over the prospect of raising the debt ceiling, many investors are withdrawing their investments, causing companies to record consecutive days of losses. The markets clearly dislike the uncertainty over the new fiscal plan and investor concern appears high. As the weeks roll on, a partial government shutdown looks plausible and, the thought of the US government defaulting on its debt becomes realistic.
Of course, both these options appear relatively unlikely, but the longer that negotiations go on for, the more realistic the possibility becomes. With Democrats and Republicans alike continuously putting politics before the national interest anything could happen (in theory at least).
A Clear Lack of Direction:
The 1st of October deadline is fast approaching and, the continued bickering makes investing tricky in case Congress fails to pass a budget. Even last weeks decision from the Fed to leave its asset purchase program at $85 billion has proved ineffective at pushing the markets higher with investors failing to see the positives.
At present, there is also very little to distract investors from these woes, with very little else scheduled in the economic calendar.
The Impacts of the Feds Decision:
The Feds decision not to taper their asset purchase program left many investors stunned. Many now consider it to be unclear what the Fed would like to see before they start scaling back their asset purchases as the economic indicators appeared positive prior to the announcement.
Trading experts at www.alpari.com claimed that “the majority in the markets were convinced that the Fed would announce a reduction in the program last week and as a result, it was largely priced in”. For this reason, when Fed officials do speak this week, investors will be analysing their every word.
Housing Remains the Focus
The housing market appears to be the source of the Fed’s anxiety over tapering. The suggestion that tapering would happen this month have forced a rise in mortgage rates and we have also seen a rise in treasury yields. Despite a lack of evidence, many believe that tapering will have a negative effect on a housing market that has, so far at least, been the cornerstone of the recovery.
All of these factors are currently causing a great deal of apprehension among investors. In the run down to the 1st of October deadline, if we don’t see significant improvements in investor confidence, this apprehension could worsen further.