The markets will be watching closely on Wednesday, for the
monthly release of the Federal Reserve meeting minutes for
This ritual is typically met with an increase in volatility,
depending on the wording of the statement and any new policy
actions voted on by committee members.
One of the most important economic indicators that the Fed is
using to guide policy decisions is jobs growth, which has
continued on a better than expected pace of late.
That may ultimately translate to a quicker exit from the Fed's
monthly bond purchases, or raising benchmark interest rates to
curb inflationary pressures.
3 Water ETFs To Quench A Summer Drought
The exact details of the Fed's exit strategy from quantitative
easing, along with future rate moves, is a hotly contested topic
among economists and market experts.
No matter the verbiage, the SPDR S&P 500 ETF (NYSE:
) will be a key indicator of stock market reaction on Wednesday
after the minutes are released. SPY will almost certainly
see an increase in volume and whipsawing price action. as traders
digest the news and position themselves for the next leg higher
With the S&P 500 Index sitting near all-time highs and
within close proximity to the psychologically significant 2,000
level, the stakes continue to mount for bulls to extend this
Another important ETF to watch this week will be the iShares
20+ Treasury Bond ETF (NYSE:
). This index of long-term treasury bonds is very sensitive
to changes in interest rates, which makes it an important
indicator of fixed-income sentiment.
If bond investors believe rising interest rates near the
horizon, we may see a selloff in TLT that could test the
resilience of bonds in the first half of the year.
Lastly, the SPDR Gold Shares ETF (NYSE:
) will find itself under a microscope on Wednesday -- as precious
metals investors consider the impact of the Fed's message.
This gold bullion ETF has recently picked up some momentum, and
is sitting in a precarious technical position that may induce
Precious metals investors may be counting on pessimism towards
stocks or bonds in the coming months as a catalyst to higher
As we get closer to a turning point in Federal Reserve
decision making, the reaction to the news in these three ETFs
will play an important role in future market behavior.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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