In the federal funds futures market the implied probability of an interest rate hike at next week's Federal Open Markets Committee (FOMC) meeting plunged from 30 per cent a fortnight ago to just 2 per cent on Monday; on Friday, this fell to zero.
Even so, and even with the implied probability of a July rate hike dropping from 50 per cent a few weeks ago to only 18 per cent now, stocks came under pressure in the latter half of the week. This was popularly known as "profit taking''; our preference is that once the short-covering was completed, it was time to resume shorting all over again.
Whatever the case, the Straits Times Index managed a 13 points rise over the five days to 2,822.97, including a 20.83 points loss on Friday. It was the fourth consecutive weekly gain for the index. Liquidity, however, has been the biggest absentee. Friday's total of 1.02 billion units worth S$919 million done was in line with recent weak averages.
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