|Posted by EJ on September 23, 2010 at 11:01 PM|
Jobless claim in the US was marginally up showing the weakness in the labour market is still prevalent. Existing home sales data was better. However it does not imply any major change in housing sector. The continued tax credit will definitely help consumption but not housing. Going fwd housing is not going to contribute to the general economy significantly. Today's new home sales and durabale goods data will throw more light on this. Other data to watch out for is German IFO ( industrial activity ) to be realeased today.
FOMC remarks were good enough to make the bond traders happy with fixed income bonds appreciating globally including those in India. There is a catch though as domestic inflation is much higher and beyond comfort level of the policy makers. However nobody wants to switch off the growth engine so soon as global condition is not capable of providing any cushion. We expect a pause in the rate hike cycle in India, hence a bullish stock market running into 3Q. Watch out for massive flux of IPOs. It may drain out liquidity from secondary market.