The Fed will raise interest rates soon.
At 2:00 a.m. Beijing time on Thursday, the Federal Reserve will announce the latest interest rate resolution, and the global market sentiment is tense.
From the trend of the day before the global market raised interest rates, we can clearly feel the panic of investors. It seems that everything is falling except the dollar:
-The US stock market felled,But it had nothing to do with the Fed's interest rate forecast, which is mainly affected by the retail giant Wal-Mart's downward adjustment of its profit forecast for the second quarter and the whole year.,raising concerns about how the highest inflation in 40 years will affect the retail industry as a whole.
-The US dollar ended its three consecutive trading days of decline.
-Bitcoin fell below $21,000, and Ethereum fell below $1,400.
-Gold prices fell, but remained above $1,700.
-US crude oil futures fell below $95.
-Anxiety is still spreading in the bond market. The yield of 2-year US bonds fell by 2 basis points to about 3%, and the yield of 10-year US bonds fell by 6 basis points to 2.73%. The upside-down range of the 2-10-year yield curve was the highest since 2000
Main Information List before raising interest rates:
1. It is expected that the Federal Reserve will announce a 75 basis point interest rate hike, and the target interest rate of the federal funds will range from 2.25% to 2.5%, reaching a neutral interest rate level (neither stimulating nor restricting the economy). This will be the second consecutive sharp interest rate hike since 1994 and the fastest interest rate hike in the history of the Federal Reserve.But，a 100 bps hike is still possible
2. As Wall Street has reached a consensus on the Fed's decision to raise interest rates by 75 basis points, the focus of financial markets is not on the rate increase itself, but the press conference of Federal Reserve Chairman Powell at 2:30 will become the focus of attention.
Given the high degree of uncertainty about inflation and economic growth prospects, Powell will not give more forecasts on interest rates (avoiding any strong guidance) and keep more options open. The US interest rate market has made a big move to long volatility, believing that the Federal Reserve cannot give a clear signal.
3. The key to the market trend may be whether Powell will give guidance on how many basis points to raise interest rates at the next meeting-for example, slowing down the rate increase at the next meeting (September).
4. The current market expectation is that the interest rate will peak at around 3.5% at the end of this year or early next year, and then the Federal Reserve will cut interest rates as soon as the first half of next year.
5. If the US stock market rises after the Fed raises interest rates, the market may enter the stage of "bad news is regarded as good news" in the future. Since mid-June, the market has accepted both bad news and good news, and the stock market has recovered some of its year-to-date losses.
6. After this meeting, it may still be inconclusive whether the market will speculate on "inflation peaking" or "economic recession", because the US GDP data for the second quarter will be released more than ten hours later (20:30 on Thursday night), which is the key to affect the market trend.
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