There are two big news stories today impacting the financial markets. The first, the price of crude oil continues to fall. The extent of the correction can be seen on the adjacent chart. High oil prices are considered by many economists to be a tax on the economy. It drags down profitability across many industries even the service sector. Falling oil prices are good news and the market rose in response. The chart is the price of Crude Oil (NYMEX) and can be viewed on the WSJ site through the link below.
http://online.wsj.com/mdc/public/page/mdc_commodities.html?mod=mdc_topnav_2_3000
The second story is the Bank of England raised their interest rate. This is the English version of our Federal Reserve changing the prime rate. By raising their interest rate, the English have made some of their investments more attractive. So the pound rose against the dollar and the euro. It also caused U.S. Treasuries to fall as investors moved funds into English bonds.
You can read more about this story on the International Herald website.
http://www.iht.com/articles/ap/2007/01/11/business/EU-FIN-ECO-Europe-Interest-Rates.php
The second story is the Bank of England raised their interest rate. This is the English version of our Federal Reserve changing the prime rate. By raising their interest rate, the English have made some of their investments more attractive. So the pound rose against the dollar and the euro. It also caused U.S. Treasuries to fall as investors moved funds into English bonds.
You can read more about this story on the International Herald website.
http://www.iht.com/articles/ap/2007/01/11/business/EU-FIN-ECO-Europe-Interest-Rates.php
Libby Mihalka
The Financial Pragmatist
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