While in the last few days a 25-basis point cut in the Fed funds rate became a foregone conclusion, judging by the reaction of the Dow Jones Industrial Average, some market participants were apparently looking for a larger cut (See chart). Of course they could have been reacting to the Fed’s hawkish language. The Fed said the risk of inflation and the risk of further economic weakness were balanced indicating a neutral policy stance. The Dow, however, rebounded from the initial reaction and ended the day more than 100 points higher.
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Financials
Manufacturing in US grows at slowest pace in three months
Manufacturing in the U.S. expanded in May at the slowest pace in three months, indicating the industry that’s spurred the expansion is cooling.
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ETFs
ProShares launches ETF that targets highly rated corporate bonds
The ETF invests in covered bonds, a type of collateralized corporate debt typically issued by non-U.S. financial institutions.
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Forex
Euro falls to 22-month low as German business confidence slides
The euro traded close to the weakest level since July 2010 versus the dollar as German business confidence slid and manufacturing shrank, stoking concern fallout from the debt crisis is spreading.
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Options
Crude options volatility rises as futures near $90 a barrel
Crude-oil options volatility rose for the first time in three days as underlying futures slipped below $90 a barrel.
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