Fed Funds Rate: Clearly the most important interest rate. It is the rate that depositary institutions charge each other for overnight loans. The Fed announces changes in the Fed Funds rate when it wishes to send clear monetary policy signals. These announcements normally have large impact on all stock, bond and currency markets.
- Discount Rate
The interest rate at which the Fed charges commercial banks for emergency liquidity purposes. Although this is more of a symbolic rate, changes in it imply clear policy signals. The Discount Rate is almost always less than the Fed Funds Rate.
- 30-year Treasury Bond
The 30-year US Treasury Bond, also known as the long bond, or bellwether treasury. It is the most important indicator of markets' expectations on inflation. Markets most commonly use the yield (rather than price) when referring to the level of the bond. As in all bonds, the yield on the 30-year treasury is inversely related to the price. There is no clear-cut relation between the long bond and the US dollar. But the following relation usually holds: A fall in the value of the bond (rise in the yield) due to inflationary concerns may pressure the dollar. These concerns could arise from strong economic data.
Depending on the stage of the economic cycle, strong economic data could have varying impacts on the dollar. In an environment where inflation is not a threat, strong economic data may boost the dollar. But at times when the threat of inflation (higher interest rates) is most urgent, strong data normally hurt the dollar, by means of the resulting sell-off in bonds.
Nonetheless, as the supply of 30-year bonds began to shrink following the US Treasury's refunding operations (buy back its debt), the 30-year bond's role as a benchmark had gradually given way to its 10-year counterpart.
Being a benchmark asset-class, the long bond is normally impacted by shifting capital flows triggered by global considerations. Financial/political turmoil in emerging markets could be a possible booster for US treasuries due to their safe nature, thereby, helping the dollar.
Sigma’s Software is supported and can operate on the following operation systems:
• Microsoft Windows 98.
• Microsoft Windows Me.
• Microsoft Windows 2000.
• Microsoft Windows XP.
Devices and software required:
- Sigma Trading software.
- Pentium 100 MHz, 16 Mb RAM, 2 GB HDD or higher.
- Microsoft Windows 98/Me/2000/XP.
- Internet access (modem or permanent connection).