USA: a firmer tone also from the Federal Reserve

[Guest guest]

Dear friends,

 

After reaching an intermediate low in mid August 2007 at around

12850, the Dow Jones Index has rallied, and yesterday, 9 October, it

rose around 120 points to reach 14165. Clearly, the markets have

reacted favourably to the efforts of the Federal Reserve to increase

liquidity in the financial market and to reduce interest rates.

 

Today, however, the US Federal Reserve is communicating a firmer

line with regard to its interest rate setting, with another decision

pending on 31 October 2007 (see below). This is in line with the

Bank of England line mentioned earlier. While the US economy is

apparently continuing to expand, the housing market remains weak,

the data reveals.

 

We will see if such communication from the Fed will serve to trigger

unrest in world financial markets this week and next, when the

Saturn-Ketu transit conjunction becomes close, as predicted last

month by .

 

That said, we should also keep in mind that this conjunction becomes

exact on 23 October, almost two weeks from now.

 

With regard to the SAMVA USA chart we should note that transit L2

Sun enters old age at 25° Virgo H3 on Saturday 13 October next. When

the markets open on Monday 15 October, L3 Mercury at 14° 12' Libra

will be conjunct natal Ketu at 17°47' Libra, while its dispositor,

L4 Venus will be closely conjunct Saturn and Ketu in Leo. Some

trouble would be expected on this day.

 

Best wishes,

 

Thor

 

SAMVA message #14905

Tue Sep 25, 2007 8:44 pm

 

Hello list members,

 

The sub prime housing loans problem in US markets is causing

concerns for a prolonged economic slow down which is likely to

result in global setbacks for markets. Astrologically, the situation

seems to be of some concerns in October, 2007, and is likely to

start looking up after middle of November, 2007.

 

Best wishes.

 

 

 

 

 

Fed Signals No Rush to Reduce Rates Again as Economy Expands

By Craig Torres

 

Oct. 10 (Bloomberg) -- Federal Reserve policy makers signaled they

are in no hurry to reduce interest rates again because they aren't

convinced the U.S. economic expansion is coming to an end.

 

The Federal Open Market Committee avoided foreshadowing its next

move after lowering the benchmark rate on Sept. 18, minutes of the

meeting, published yesterday, showed. Officials didn't want

investors to conclude extra cuts were guaranteed, the records said.

 

Economic reports since then have justified their caution:

manufacturing and services industries continued to expand last

month, while employment picked up. The Dow Jones Industrial Average

has climbed 3 percent to a record since the meeting.

 

``I don't think the Fed will move in October, but I certainly don't

think they've ruled it out,'' said Lou Crandall, chief economist at

Wrightson ICAP LLC in Jersey City, New Jersey. For now, ``the

economic data have not made much of a case for any additional

easing.''

 

Fed staff economists cut their estimate for fourth-quarter growth,

the minutes said, while stopping short of predicting a recession.

Two Fed bank presidents yesterday said credit market conditions have

improved, yet remain fragile. Fed officials next meet Oct. 30-31.

 

``They can now afford to take their time, and gather more data,''

said Charles Lieberman, chief investment officer at Advisors Capital

Management LLC in Paramus, New Jersey, and a former economist at the

Fed's New York branch. ``Certainly, the sense of urgency is gone.''

 

Mortgages, Risk

 

The gap in interest rates between 30-year fixed-rate mortgages of

$417,000 or less and 30-year ``jumbo'' loans of more than that

amount fell to 78 basis points in the first week of October. That's

down from 98 basis points last month, according to Bankrate.com A

year ago, the difference was 31 basis points, or 0.31 percentage

point.

 

A Citigroup Global Markets index tracking risk spreads of sovereign

bonds and other credit securities has dropped to 0.77 from 0.91 the

day before to last month's Fed meeting. A reading of 1 indicates

high risk aversion.

 

``There is not as much of the edginess of concern with the short-

term funding markets,'' said James Caron, global head of interest-

rate strategy at Morgan Stanley in New York. ``There is still room

for an accident going forward.''

 

Janet Yellen, president of the San Francisco Fed, said yesterday

that liquidity constraints ``are gradually being resolved,''

although markets aren't back to ``business as usual.'' She made the

comments at a speech in Los Angeles.

 

`Still Fragile'

 

St. Louis Fed chief William Poole said in a speech in his bank's

home town that financial markets have stabilized, yet ``have not

returned to normal and are still fragile.''

 

Policy makers all concluded it was best to lower their benchmark

rate by half a point to 4.75 percent, double the amount that most

economists forecast, the minutes showed.

 

Yields on federal funds futures contracts show a 64 percent

probability that Fed officials will leave the benchmark lending rate

unchanged at this month's meeting.

 

``Further actions would depend on how economic prospects were

affected by evolving market developments and by other factors,''

according to the records. Any statement on the balance of risks to

the economy ``could give the mistaken impression that the committee

was more certain about the economic outlook than was in fact the

case.''

 

Fed officials continued to express concern about inflation, citing

labor costs and a weaker dollar, the minutes showed. The currency

fell to a record low of $1.4283 per euro on Oct. 1.

 

``Inflation risks could be heightened if the dollar were to continue

to depreciate significantly,'' the minutes said.

 

`More Confident'

 

The Fed's preferred price gauge, which excludes food and energy

costs, rose 1.8 percent in August from a year earlier, the third

straight month within the 1 percent to 2 percent comfort range

stated by several officials. Policy makers ``were a little more

confident'' the decline ``would be sustained,'' the minutes showed.

 

The FOMC expressed some skepticism about Labor Department figures

that showed the first decline in U.S. payrolls in four years. The

August report was later revised to show a gain of 89,000 jobs, from

the previous estimate of a 4,000 decline. Employers hired 110,000 in

September.

 

``If no big shoe drops in the meantime, I think they will hold

steady'' on Oct. 31, said former Dallas Fed president Robert McTeer.

``I think if they don't cut at the next meeting, they are through.''

 

`Exceptionally Weak'

 

Housing ``remained exceptionally weak,'' the minutes said, and ``the

faster pace of foreclosures as subprime mortgage rates reset was

also seen as posing a downside risk'' to residential real estate.

 

The Fed staff ``marked down'' their fourth-quarter economic growth

forecast, and ``trimmed'' the 2008 outlook, the minutes said,

without providing details.

 

``We do not know how financial markets will evolve, and we do not

know how households and businesses will respond to financial

developments,'' Fed Vice Chairman Donald Kohn said in a speech in

Philadelphia last week. ``We will need to be nimble in adjusting

policy to promote growth and price stability.''