LIVE MARKETS-Intraday tactics around the Fed decision

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

INTRADAY TACTICS AROUND THE FED DECISION

The Fed is widely expected to lower borrowing costs on Wednesday for the first time since December, due to worries about the worsening labour market.

Citi quant strategist Alex Saunders has taken a look at how markets tend to react into rate cuts.

"Equities and bonds rally into and out of the first cut. The dollar is weak into the cut but is then flat; gold is strong into easing but also flat afterwards," Saunders says.

On the day, things are maybe a little more complicated.

"Bullish equities reactions to FOMC statements get mostly unwound; bearish reactions have follow-through," Saunders writes, with rallies typically unwound by the close.

For bonds, rallies on Fed releases typically stick, while sell-offs reverse.

"Hawkish/dovish surprises (as measured by the price action on the day) can see some follow-through but mostly on the dovish side; hawkish days typically end with a reversal post the press conference into the equity close," Saunders notes.

(Samuel Indyk)

*****

EARLIER ON LIVE MARKETS:

CAN THE RALLY IN GOLD BE STOPPED? CLICK HERE

UBS SEES 'LARGE MONEY POOLS' WADING BACK INTO EUROPE CLICK HERE

SAP BOUNCE HELPS TECH, STOXX STEADY CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES STEADY ON FED DAY CLICK HERE

FINALLY, THE FED CLICK HERE