The main factor determining the magnitude of rate hike is the inflation.
The market wants to take comfort that if Friday's data is worse off, the Fed will ease back on the rate hikes. However I am not too hopeful. The message is clear that even if recession happens, the inflation has to be tamed.
I am expecting more room for stock prices to fall with the next earnings season and alsothe next Fed meeting. The market has priced in 0.75% but if inflation remains high, there is a chance higher rate hike would be needed.
The main contributors to inflation are still present. The high energy prices which has eased back a little may come back up with the higher demand with the winter season. The supply chain imbalance have not eased yet and China is still on a zero covid policy.
I believe there is still room for stock prices to drop till the end of the year. I will patientlywait...
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