Fed is likely to Raise by 75bps, SPX Short-term Reverse Needed?
Fed is likely to raise by 75bps? SPX short-term sees the reverse need?, Dollar will continue to be strong.
The Federal Reserve will start an interest rate meeting this Sept 21st. According to the general market forecast, the Federal Reserve may raise interest rates by 75 basis points. Once raised by 75 basis points, the Federal Reserve's benchmark interest rate will be raised to more than 3%. There is not much room for interest future hike.
Now the highest expectation for the Fed to raise interest rates is 4.4%, which means that after this interest rate hike, the Fed may have 2 to 3 interest rate hikes to end this round of interest rate hikes.
Of course, it also depends on changes in US inflation and economic growth and employment data. If U.S. inflation can be brought under control relatively quickly, the Fed may reduce the number of interest rate hikes.
On the other hand, if U.S. inflation remains high, the Fed may continue to raise interest rates, so it depends on the specific inflation data. The U.S. dollar index continued to rise as the Fed raised interest rates, leading to a depreciation of non-U.S. currencies.
When will the dollar peak?
I think there are several factors that could lead to a reversal of the dollar rally.
First, the Fed's policy stance has eased. The movement of the US dollar in recent months, especially against the G10 currencies, is closely related to the level of US interest rates. If core U.S. inflation slows further in the coming months, it could spark speculation about a future Fed policy shift.
Second, global economic growth has bottomed out. While we believe that the global economic outlook is likely to continue to be revised downward, if pressures on energy prices ease and/or if fiscal stimulus in various countries is more effective, economic forward-looking indicators outside the United States may pick up, which may affect the strength of the dollar.
For now, the dollar tends to benefit when global growth is under pressure and the growth prospects of America's major trading partners, such as Europe, are bleak.
Seems the dollar may rise further in the near term, and it will remain strong for some time.
Regarding stocks market. What's you plan? Continue to short or wait for opportunities?
Do you believe there would be a short reverse if the 75bps being priced in. Other wise 100bps hike would cause a big drop.
Perhaps the before the last round of bear market drop, there need a reverse. How do you think so?
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