All can only guess what Bernanke will deliver in Fed press conference this Wed on a slightest clue of possible continued QE. However, this is not the first occasion for anybody in the market to push themselves into the sidelines struggling on what to expect. They know what happened post-mortem last year when QE1 was due, with the exception, now, all are expecting the same. But, will it be the similar case when everybody in town tend to think the same? Should we be on the same boat or outsmart by leaving those reacting boats behind us? Has market possibly given a few clues on what to do? Opportunities, in or out?
In fed fund futures markets, the contract expiring in December 2011 has fully priced in a target interest rate of 0.25 percent, the top end of the central bank's current rate range of zero to 0.25 percent but the January 2012 contract only implied a slim 6 percent chance of another hike to 0.5 percent. Such bets on a glacially slow increase in rates have kept traders interested in buying U.S. Treasuries, pushing the 10-year U.S. yield down more than 20 basis points from this month's highs of 3.36 percent. "There is some risk reduction because the market wants to watch if Bernanke will say anything about a change of stance," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments. "Any change of stance is highly unlikely." '+'
