The probability of soft landing has decreased, volatility increases



The markets, which fell again after Jackson Hole, were shaken by the Fed’s aggressive stance. Stating that it will continue to raise interest rates contrary to expectations, Fed chairman Powell said, according to experts, with this stance. ‘soft landing’ It also eliminated the low probability that existed for it. While experts are confident in the recession, they expect high volatility in equity markets.

forbesAccording to the news from Sergei Klebnikov from Turkey, the speech by Fed chairman Powell, in which he indicated that it would take some time to reduce inflation and signaled that he would keep his hawkish stance, showed that the possibility of a reversal of monetary policy is increasingly distant. According to experts, this means that we should be prepared to see high market volatility in the coming months.

Momentum slows in the markets

Borsagundem.comDespite the impressive rally in equity markets from their low point in mid-June, there are ways to prevent the negative mood in the markets from continuing into week three as investors are concerned about long-term rate hikes and more monetary policy. restrictive of the FED. Research. Experts say they expect the stock market to fluctuate this week and a week with high volatility.

nationwide Investment research chief Mark Hackett said the compelling reminder from Fed Chairman Powell that he still has a lot of work to do. ‘momentum’you clearly say it slows it down.

Investment platform based in New York At the momentEdward Moya, senior market analyst at, said Fed Chairman Powell has made it clear that there will be no Fed pivot anytime soon, and therefore expects “more weakness” in stocks amid growing concerns from all who bought shares. earlier this month.

High volatility expected

Japanese financial company Nomura According to a note from US senior economist Rob Dent, “The Fed ‘rapid’ after the rate hike ‘purposely’ rates ‘higher longer’ and this policy greatly increases the likelihood of a recession in 2022 ”.

moody Martin Wurm, senior analytics economist, said: “Continued inflation has prompted the Fed to take a path that leaves little room for a soft landing.” State that you have a similar opinion.

RBCInvestors should expect high volatility and stocks are expected to end in 2022, US Head of Strategy Lori Calvasina said in a statement. ‘corrugated’ at market conditions, mid-June risk of retesting the minimaclaims it is on the rise.

Rate increase of 75 basis points to the price of

Market expectations currently largely point to the Fed’s next 75bp rate hike in September. ECM Group According to the data, investors 75 percentit is currently considering a 75 basis point increase rather than a lower 50 basis point increase.

“Fed Chairman Powell’s speech not only shifted the consensus bet for the September meeting to 75 basis points, but also It has also started to modify the interest rate hike curve in 2023 “ He says. Hackett points out that the new curve will take longer and will be modeled in line with a higher policy.

Inverted yield curve

According to Nomura’s Dent, Fed officials will take a closer look at historical data, particularly during the period of high inflation in the 1970s and 1980s. “Previous bouts of monetary tightening indicated that the Fed would not ‘lose its tightening stance prematurely’ until inflation returned to normal levels,” Dent says.

Wurm said investors’ ten-year and two-year Treasury yield margins in futures markets have been reversed since early July, with rate hikes finalized through 2023. “tighter credit terms” stresses that they need to be more careful at this point. Wurm points out that the reversal of the yield curve has always occurred before every recession since 1955.

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