The expectation that the US Federal Reserve (Fed) will become aggressive in interest rate hikes on the European Central Bank has hit global markets. Inflation, which was announced on Friday and rose 8.6%, or 0.3 higher than expected, went undigested at the end of the 2-day weekend and began avoiding risk on Monday.
The fear stems from the fact that the Fed’s delay in tomorrow’s rate decision increases the possibility of shocking the system.
NO ATTITUDE TO RISK IN CASE OF DISCESSION
➔ The fears are that the Fed will raise interest rates by 0.75 points instead of 0.50, or increase the previously expected break in the 2.5-3% range.
➔ Normally, expectations were that the Fed would stop raising interest rates in the 2.5-3.0 percent range and wait for inflation and the economy to move. Now these expectations have increased by about 0.5 percentage points to 3.5%.
➔ With high inflation, the withdrawal of abundant and cheap money The Fed’s aggression can lead to a stagnation of the economy or a decline in growth.
➔ This is the development that for now has put an end to risk appetite and has led to heavy selling in the markets, especially in the United States.
THE PRODUCTION CURVE HAS SIGNED A RECESSION
➔ Let’s start with interest rates first. US bond yields have skyrocketed to over 3%. It increased to 3.3961 in 2 years, 3.5085 percent in 5 years, 3.379 percent in 10 years, and 3.359 percent in 30 years.
➔ If you pay attention The lowest interest rate in four different terms is 30 years, which is the longest, and the highest is 5 years. Yields on 2-year bonds are greater than both 10 and 30 years.
➔ The yield curve is inverted. This also It indicates that the US economy is likely to enter a recession or recession in about two years..
➔ Because that’s what has mostly happened over the past 50 years. Bond yield curves reversed during both the 2008 crisis and the 2020 pandemic. Short-term bonds traded at higher interest rates and long-term bonds at lower interest rates.
COLLAPSE IN CRYPTO ACTIVITIES
➔ The end of the era of abundant and cheap money and the realization that a return will be possible with a recession and a recession has hit cryptocurrencies in the first place, which are the riskiest assets.
➔ Crypto assets by closing from Friday to Monday It fell 22.7% on the Bloomberg Galaxy index. The index of November 10, 2021 Compared to the record level, the decrease in 7 months was 68%.
➔ Preparations for the regulation of this market play an important role in the depreciation of cryptocurrencies. Certain obligations and capital requirements are imposed on the actors that will take place in the sector. There is also a certain fee. Regulatory risk has put pressure on the market.
➔ With this collapse, the market value of total cryptocurrencies dropped from $ 2 trillion 995 billion on November 10 to $ 960 billion yesterday.
➔ The 7-month decrease in the total value of the cryptocurrency market reached $ 2 trillion and 35 billion. Big loss for a small market among the world markets.
$ 21.4 BILLION CANCELED FROM EXCHANGES
➔ The biggest loss among markets is in exchanges. Yesterday global equity markets recorded a steep 3.6% decline with the MSCI index. The total market value of the world stock markets fell to $ 101.1 trillion.
➔ According to Bloomberg Reaching a market value of $ 122.5 trillion on November 17, $ 21.4 trillion was wiped out of the world stock markets in 7 months.
➔ The size of the bond market also decreased from $ 69.2 trillion to $ 60 trillion. The decrease here is about $ 9 trillion 162 billion. However, the actual reduction is greater.
➔ Because states haven’t cut their lending since August 2021 – in fact, they’ve increased it. Intermittent redemption bonds also came out of the volume. So the depreciation could be higher.
ONE SIXTH OF THE CURRENT ASSETS
➔ As a result, the sum of the three asset classes hit record highs of $ 194.7 trillion. Noting that the bond is slightly longer 32.6 trillion dollars melted in 7 months and fell to $ 162.1 trillion.
➔ The size of the $ 32.6 trillion loss across the three markets is at the level of a third of world GDP forecast for this year.
➔ The loss due to the record market values of the markets is 16.7%. Or one sixth of your total wealth.