Fed’s Policy Announcement Due Today

On June 20, 2012 by TradingDesk

The much anticipated policy announcement by the Federal Reserve’s Open Market Committee (FOMC) is, finally, due out today at 11:30 am. Stocks have rallied over the past several sessions in anticipation that some new form of stimulus will be announced, while commodity markets haven’t moved, suggesting that some traders aren’t convinced that anything major is pending. Past programs, QE1/QE2/Operation Twist, have pushed the US Dollar lower, and risk assets – most notably stocks and commodities – sharply higher, although each new program has had less effect than the last. While it may be disagreeable to some that markets become so fixated on a central bank, it’s hard to argue that there has been a larger driver in market prices over the past 3 years than FOMC policy.

While we wait, the DOE report will come out at 9:30, and is expected to show small gains in refined products and a small draw in crude stocks. The refinery run and export figures will continue to be the most important drivers of price action, as plants ramp up to capture good margins in most locations, and as cargo ships race to distribute the excess supply to foreign buyers. News that Motiva’s new 300mb/d crude unit may be shut for as long as a year will be closely watched over the next few weeks, as no one is quite certain if other plants are ready to pick up the slack.

CLICK HERE for a PDF of this morning’s charts

 

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