First Impressions

On Wednesday afternoon, Federal Reserve Chairwoman Janet Yellen gave her first post-meeting press conference. One statement stood apart from the rest, and has been called a “gaffe” by the various media outlets. The supposed mis-statement, which sent equities markets down nearly one percent, was a possible six-month time horizon on a potential rate hike. All things considered, the statement was rather benign, as was the market reaction.

But, benign does not sell newspapers, so the markets were apparently “rattled” by her statement. Whatever. For more on the Fed meeting and Ms. Yellen’s press conference, please check out the stories and our color commentary below. 

Quote of the Day

This could have been a rookie gaffe on Yellen’s part,” Paul Edelstein, director of financial economists at IHS Global Insight, said in a note to clients. “This was, after all, her first press conference.

Paul Edelstein, director of financial economists at IHS Global Insight, on Fed chairwoman Janet Yellen’s speculation that the Fed might raise interest rates sooner than expected, as quoted in the WSJ story “Yellen Debut Rattles Markets.”

Lead Stories

Yellen Debut Rattles Markets
Investors bristled after Janet Yellen emerged from her first meeting as Federal Reserve chairwoman with some unsettling signals about the central bank’s outlook for short-term interest rates.

***DA: Rattled? Hardly. Rather a benign move, actually, especially on the heels of the recent runup.

Jon Hilsenrath’s Takeaways From the Fed Statement and Economic Projections
MoneyBeat – WSJ
DROPS THE THRESHOLD: The Federal Reserve has been linking its plans for short-term interest rates to the path of the unemployment rate. It dropped that direct connection and said it would look at a broader array of indicators in deciding when to start raising short-term interest rates, including labor market conditions, inflation and financial conditions.

European Bonds Decline With Global Peers on Yellen Rates Signal
Lukanyo Mnyanda and Neal Armstrong – Bloomberg
European government bonds slumped with counterparts from the U.K. to Australia after Federal Reserve Chair Janet Yellen signaled that U.S. interest rates may rise by the middle of next year.

Europe Sees Record Swap Expansion as Junk Swells: Credit Markets
Abigail Moses – Bloomberg
Europe’s junk-bond market, once considered a small outpost in the fixed-income world, is gaining relevance as growth exceeds that of the U.S. and bankers race to offer investors another way to bet on credit quality.

Treasury 10-to-30-Year Curve Narrowest Since 2010 on Fed Outlook
Susanne Walker and Neal Armstrong – Bloomberg
The difference between yields on 10- and 30-year U.S. Treasuries narrowed to the least since 2010 after the Federal Reserve indicated interest rates may rise faster than anticipated while the pace of growth is moderate.

U.S.-based bond funds get biggest inflows in 10 months in latest week -ICI
Investors in U.S.-based mutual funds poured $5.3 billion into bond funds in the week ended March 12, marking their biggest inflows since early May 2013 on concerns over Ukraine and China, data from the Investment Company Institute showed on Wednesday.

***DA: When danger reared its ugly head, into treasuries they fled.

Argentina’s Yields Lure Back Bond Buyers
Bargain-seeking investors are piling into high-yielding Argentine bonds despite the country’s history of economic mismanagement and financial turmoil. But they are prepared to retreat quickly, displaying a lack of confidence in Argentina’s long-term prospects.

***DA: That’s the ultimate bet, isn’t it? Can we cash enough coupons before they stop paying their bills again? And what of the currency risk?

UK Budget 2014: Handouts to rich and old paper over a bleak future
Martin Wolf –
George Osborne, chancellor of the exchequer, has given a highly political Budget focused on benefiting the prosperous and the elderly. Since he is a Conservative chancellor preparing for a general election next year, that is hardly surprising. Far more important, the Office for Budget Responsibility’s view of the long-term economic prospects remains grim. The Treasury also believes that the ratio of public debt to gross domestic product must be brought down to pre-crisis levels. It is the hair shirt for the indefinite future. Welcome to austerity Britain.

Parsing the Fed: How the Statement Changed
The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting.

***DA: Ugh! The thing I have always hated about Fed meetings – finding the meaning behind the meaning behind the meaning of what was said.

FCA bans and fines trader £662,700 for manipulating gilt price during QE
Mark Stevenson, a bond trader with nearly 30 years’ experience, has been banned from the industry and fined GBP662,700 for deliberately manipulating a UK government bond (gilt) on 10 October 2011.

Central Banks

Macro Horizons: A Reminder of the Fed Chief’s Power
MoneyBeat – WSJ
Janet Yellen has been given a demonstration of the influence of her words now that she is head of the most powerful central bank in the world. In this case, the phrase that mattered was “something in the order of six months,” which she uttered during a press conference Wednesday.

***DA: I heard an asterisk in her voice. Didn’t you hear the asterisk? Six months *Unless something negative comes out, in which case all bets are off.

Fed’s Isolationism Means Calm Markets Mask Deeper Global Problems
Michael J. Casey – MoneyBeat – WSJ
If Janet Yellen has glanced at bond yields or stock indexes during the Federal Open Market Committee meeting over the past two days, the new Fed Chairwoman has likely been satisfied.

***DA: If policy is determined by stock or bond prices, we are doomed in the end.

Dudley Expresses Concern on Leverage Rule
An influential New York bank regulator has privately raised concerns in recent weeks about a proposed rule that seeks to make the nation’s largest banks safer, frustrating other regulators who see it as a centerpiece of a financial system overhaul and want it to take effect swiftly.

***DA: Will Dudley do right by taxpayers?


Yuan Falls Farther, but Ride May Be Nearly Over
SHANGHAI—China’s yuan fell to its lowest level against the U.S. dollar in more than a year, as signs of tighter U.S. monetary policy benefited Beijing’s recent campaign to deter speculative capital inflows by weakening its currency.

***USD/CNY powered through 6.2 this morning, a level thought to be critical.

SNB Vows to Defend Cap as Ukraine Crisis Renews Pressure
Catherine Bosley – Bloomberg
The Swiss National Bank pledged to defend its cap on the franc, saying the currency remains strong and the global economic recovery is beset by risks.

Bitcoin firms explore U.S. rules for derivative exchanges
Douwe Miedema | Reuters
Companies have inquired in the past month about regulations that would govern exchanges for bitcoin derivatives, a top U.S. regulator said on Wednesday, a sign such virtual currencies could become a more mainstream financial product.

BitBeat: KnCMiner Flips the Scrypt; Sells $2 Million of New Rigs in Four Hours
MoneyBeat – WSJ
Scrypt mining, which is the standard used in mining altcoins like litecoin and dogecoin, is apparently getting pretty big. KnCMiner, which makes and sells bitcoin mining rigs, is venturing into the world of scrypt mining rigs, and may have struck a new vein of gold.

In Hong Kong, Betting Big on Bitcoin
By day, David Shin is an investment banker at a major financial firm. By night and in pretty much every other free minute, he is an entrepreneur looking to break into Hong Kong’s growing Bitcoin scene.

Indexes & Index Products

S&P Dow Jones Indices Website Named Best Index Site of the Year for 2013 by ETF.Com
PR Newswire
S&P Dow Jones Indices, one of the world’s leading providers of financial market indices, announced today that its website,, has been named “Best Index Website of the Year” by (previously According to, “S&P Dow Jones receives wide praise for the navigability of the redesigned S&P website, especially coupled with easy access to tons of data, including index returns.”

An Interview With Founder And CEO Jim Wiandt
Jim Wiandt is an indexing aficionado. He and his extended staff of researchers and journalists at are on top of every wiggle in the industry. Over the years, Jim has created a small media empire and the go-to resource for all things index, index fund and exchange-traded fund (ETF) related.

S&P 500 Index: Price Action Reminiscent Of The 1990s
The S&P 500 index has managed to break the 1962 and 1983 records of remaining above its 200-day moving average and it is now set to challenge those in the 1990s. Price action in the next two to three months may determine whether this will be the longest bull market since the 1960s or a top will be formed.

WisdomTree Voted ‘Most Innovative ETF Issuer of the Year’
WisdomTree Investments, Inc., an exchange-traded fund (“ETF”) sponsor and asset managertoday announced that it has received three ETF Awards from (formerly Index Universe), a leading independent authority on the ETF industry:

Stoxx unveils “strong balance sheet” indices based on Altman Z-Score
ETF Strategy Stoxx, a leading European provider of indices, has introduced the Stoxx Strong Balance Sheet Indices, a family of equity indices which select stocks based on the Altman Z-Score. The new indices are designed to act as underlyings for exchange-traded funds (ETFs) and other investable index-linked products.


Gold Drops to 3-Week Low as Fed Foresees Rate Increase
Nicholas Larkin and Glenys Sim – Bloomberg
Gold fell to the lowest in almost three weeks in New York after the U.S. Federal Reserve indicated that it will raise interest rates next year, curbing demand for a store of value. Silver declined.
Bullion fell 1.3 percent yesterday as U.S. policy makers cut monthly bond-buying by $10 billion and said they will slow purchases in “further measured steps.”

Autilla establishes precious metal OTF with multi-asset solution from Cinnober
For the global precious metals marketplace, Autilla Ltd. today announces the selection of TESS Connect & Go from Cinnober Financial Technology as its platform to migrate its precious metals Over-the-Counter (OTC) broking onto a proven electronic trading platform.

Sunken Ship Laden With Gold Lures Treasure Hunters – Again
Karla Zabludovsky – Newsweek
Mike Milosh stared into the monitor showing video from a shipwreck two miles below him. His remotely operated vehicle, Nemo, had stirred up a cloud of sediment, and he was eagerly waiting for it to settle. When it did, he remembers, a pile of 50 gold bars appeared on the screen.

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