Prices declined about a half a percent as the Federal Reserve two day meeting ended, with expectations that it would maintain its open market purchases and continued its policy of ease. Yet given the deepening disquiet in Congress about the Fed and its upcoming chairperson, it is not unreasonable to consider the possible impact on asset prices.
Clearly some of the Congressional enemies of the expansionary policy of the Fed are increasingly vocal, and are now finding support for their demand of an audit. They are pressuring for more openness by the Fed – even though making the Fed tip its hands on intended purchases and sales will not only create windfalls for traders but also lead to diminishing their impacts on the economy.
Our diagram shows just how these short-term interest rates affect asset prices: clearly the price changes in the S&P500 run parallel to the interest rate of the Ten Year Treasury debt.
DJIA -.39 percent
NASDAQ -.55 percent
S&P500 -.49 percent
