Global markets are following a negative trend with fears that the steps that the US Federal Reserve (Fed) will have to take to control inflation will put the country in a recession. Yesterday, after the indices depreciated by around 4% in the New York stock market, the S&P 500 index fell 20% from its January peak, confirming the technical bear market.
THE DOLLAR INDEX RISES TO A MAXIMUM OF 20 YEARS
While the selling trend, also effective in the bond markets, has taken bond yields to regions that have not been seen for a long time, the US 10-year bond yield reached its highest level in the last 11 years with 3.36 per hundred. The reversal of the yield curve on US 3, 5, 10 and 30 year bonds also continues this trend. The dollar index rose to 105.2, the highest level in nearly 20 years, due to the growing demand for dollars in the markets with these developments.
STRONGER EXPECTATION 75 INCREASE IN BASIC INTEREST
Interestingly, as of this morning, the Fed’s stance as the strongest expectation regarding the interest rate decision, after the 75 basis point rate hike, which Fed officials had previously described as unlikely, it was included in yesterday’s price.
INTERESTS INCREASED TO 4 PERCENT BY MID-2023
In money market pricing, the Fed is estimated to raise interest rates by 75 basis points at its meeting, which begins today with a 96 percent probability and decisions of which will be announced tomorrow. On the other hand, after yesterday’s pricing, the Fed is expected to raise the official rate to 4% by mid-2023. While the selling pressure in global markets has also been effective in cryptocurrencies, Bitcoin has registered the highest level. low since December 2020 with 20,846 in the new day after losing 15% yesterday.
EYES ON FED
The June meeting of the Federal Open Market Committee (FOMC), which sets the Fed’s monetary policy, begins tomorrow. The Fed will announce its interest rate decision today at 9:00 pm Turkish time. In addition to the rate hike decision, the Fed’s messages to the markets and statements by Fed Chairman Jerome Powell at the 9.30pm press conference will be key to providing clues about the tightening policy they will continue to follow.
WHAT WAS THE INTEREST DECISION IN MAY?
In its latest meeting, the Fed raised the policy rate by 50 basis points in line with expectations. However, the bank raised the interest rate from 0.25-0.50% to 0.75-1.00%. Fed Chairman Jerome Powell also said they will continue to tighten monetary policy until inflation drops.
Last minute › Economy › The eyes and ears of the global markets are on the Fed’s Interest Rate Decision to be announced today! An increase of 75 basis points is certain, according to economists – Last Minute
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