Daily Market Commentary for October 24, 2011

President Barack Obama unveiled a changed mortgage refinance plan that would allow homeowners who have suffered steep price declines on their properties to get cheaper loans. (read more at Millennium-Traders.Com)
http://www.millennium-traders.com/news/newscommentary.aspx

Strong headwinds are preventing a more vigorous recovery and the Federal Reserve is considering a range of tools, which were not disclosed, that could boost economic growth, per William Dudley, the president of the New York Fed Bank today in a speech at Fordham University. Dudley called the economy's performance this year a "major disappointment." Some top Fed officials are pushing for a new round of purchases of mortgage-backed securities while others are focused on giving clearer guidance of what factors support the Fed's view that short-term rates can stay at zero until mid-2013. Dudley said Fed policy was not "all-powerful" and needed complementary fiscal as well as, housing policies. Dudley expects inflation to slow down in coming quarters

The Federal Reserve Bank of Chicago's national activity index, which gauges the health of the U.S. economy, improved to -0.22 during September from -0.59 in the month of August. The bank said the increase was spurred by gains in employment-related indices. The Chicago Fed index points to economic growth "below its historical trend" though the offshoot could be falling inflation "over the coming year." A three-month average of the index, rose to -0.21 from -0.28 in August. The Chicago Fed's gauge is composed of 85 separate economic indicators with last month, 39 of the indexes were positive while 46 were negative. A reading of zero means the economy is performing at trend growth rates.

The U.S. dollar fell today to its lowest level against the euro - since early September - following a report that Germany is willing to leverage Europe’s bailout fund to more than 1 trillion Euros or about $1.39 trillion. The greenback fell more versus the Japanese yen, staying near a record low despite a threat by Japanese authorities to intervene in currency markets to depress the yen. The euro extended gains after German opposition leaders agreed to increase the strength of the European Financial Stability Facility after a briefing with Chancellor Angela Merke. During the summit on Sunday, European leaders focused on technical details as projected last week. Few traders had expected a major announcement to emerge from the meeting although stakes are high for something major to be announced within the next few days. Leaders indicated a consensus toward a plan to require banks to shore up capital while ruling out using the European Central Bank to boost the European Financial Stability Facility’s firepower. Negotiations continue over calls to require private-sector bondholders to accept larger haircuts on Greek debt holdings beyond the 21% write-downs agreed to at a summit on July 21.


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