Markets rallied yesterday following the Fed’s announcement. The rally continued through most international markets and U.S. futures point to a higher open today. The Fed announced plans to step up the purchase of agency mortgage backed securities and agency debt, and a plan to purchase up to $300 billion of long-term Treasuries over the next six months. The Treasury purchase is aimed at driving down market rates to help spur demand for mortgage financing.
The enthusiasm today is being somewhat tempered by the potential long-term consequences of the Fed’s actions. Weekly jobless claims did come in slightly better than expected, but remain elevated at 646,000. Continuing claims meanwhile hit another record high, jumping to 5.473 million.
After the open, investors will focus on the leading indicators for February, which are expected to have fallen 0.6%, after rising 0.4% in the previous month. The Philadelphia Fed index, one of the more closely watched reports on regional manufacturing, is also scheduled for release and is expected to improve to minus 39 for the month of March. In the prior month, the index was minus 41.3.
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