Purchases in the market awaiting the Fed: Bets point to 75bp

Within hours of the U.S. Federal Reserve’s monetary policy decision, the market reflects buying, albeit at low volumes, in the main stock indices, with the Dow Jones gaining 145 points or 0.47%, the S&P 500 up 18 points or 0.48%, and the Nasdaq up 42 points or 0.37%.

Bets are widely pointing to a 75 basis point rise, after August inflation failed to reflect the expected cooling. In fact, after the report, the 100 bps chance jumped among the alternatives, with fed funds futures giving it a 15% to 20% chance.

However, finally knowing the decision made by the US central bank will partially minimize the uncertainty marked these days in the market, after expectations prior to the August report were completely deflated, which suggested that the Fed would lower the aggressive rate in the rate hike by the end of the year.

Now, with inflation still showing resistance to falling, the agency has made it clear that it will continue with the liquidity restriction strategy, even if it implies a slowdown in the economy.

“There has been so much speculation about the Fed’s next move that finally having a decision should provide much-needed relief to investors,” Bloomberg quoted Danni Hewson, an analyst at AJ Bell, as saying.

“If he sticks to the script and offers another 75 basis point hike, markets are likely to rally a bit, in part because the specter of a full percentage point hike failed to materialize.”

Now, attention will be focused on longer-term projections, although in the latest reports, the agency’s forecast pointed to the interest rate reaching 3.8% by 2023, it is possible that upward adjustments will be reflected today, and that by December of this year the interests are already at 4%.

Read Also   Spain's Meliá Hotels returns to profits in 2022 and expects a new upturn in travel

Among the most active stocks today is General Mills Inc (NYSE), which brought optimism to the market, with good quarterly results, and a better earnings and revenue forecast, which implies in general perspectives, some strength in demand.

Leave a Comment