Feb. 19, 2010 (Chinavestor) A decision to increase direct loan rate by .25% charged to banks is the clearest signal yet that the FED is about to wind down the stimulus program. The increase is the first such raise since June 2006. News sent the dollar higher, oil and commodity prices lower and stock markets tumbled world wide. The Hang Seng Index fell -528.13 points or -2.59% to 19,894.02, under the psychologically important 20,000 level. The sell-off was universal, not a single component of the 42 member Hang Seng Index rose. Energy, commodity and financials led the decline.
Index futures started to come off from earlier lows but expect volatility to remain for the rest of the day.
Treasuries have been outperforming major indices, a sign that investors have growing confidence in the U.S. economy. The FED decision to hike rates came at the right time - though markets might be hurt for the short term.