U.S. stocks are trading close to an intraday high with major indices above 1 percent while the U.S. dollar is sinking against a basket of foreign currencies amid signs that the U.S. Federal Reserve won’t be raising interest rates any time soon.
Although the Federal Reserve removed the word “patient” from their released March policy statement about raising interest rates, Fed members believe that it is “unlikely” a rate increase will occur at the Fed’s next meeting in April, thereby lowering the chances of a rate hike in June as some economists were expecting.
Treasuries rallied on the news, driving down the yield on the 10 year treasury to 1.92 %, down 6.21 percent, dropping ever closer to a 52 week low of 1.64 %.
Perhaps most striking the Federal Reserve re-established and lowered its estimate of what constitutes full employment.
The Fed revised the full employment unemployment rate of 5.0 to 5.2 percent from a previous reading of 5.2 to 5.5 percent.
The Fed’s economic projections have also changed with PCE and Core PCE inflation.
The Fed doesn’t expect PCE and Core PCE to reach the Fed’s target of 2 percent until 2017.
Today crude oil dropped close to 3 percent following a U.S. government report that revealed a 10 week increase in crude supplies, outpacing forecasts.
Oil supplies are at an 80 year high while crude prices have dropped to a 6 year low on storage concerns.