Stocks bounced from their session lows Tuesday but still closed in negative territory after the Fed announced new measures designed to boost the sluggish economy.
Specifically, the U.S. central bank said it would begin funneling proceeds from its maturing mortgage bonds into longer-term government debt in an effort to support the sputtering recovery.
The move marks an important policy shift for the Fed, which just months ago had been debating how to start winding up its various monetary stimulus programs.
Also, the Fed also renewed its pledge to keep interest rates low for an extended period, as had been expected.
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Instant Insights with the Fast Money traders
This tells me the trade is risk-on, says Tim Seymour. The decision says to me that the Fed will do whatever it takes to be preemptive on deflation.
I agree that we’re looking at risk-on, says Joe Terranova. It seems the Fed is protecting the economy from more downside. However, I’m also a buyer of gold , he says, as a hedge.
As far as I'm concerned what the Fed said to us is that they’re willing to sacrifice the strength of the dollar to support the economy, says Brian Kelly. I’m a seller of US dollars and a buyer of Swiss Francs. And I’m also a buyer of gold.