Bets on a third 75 basis point interest rate hike rose to 86% in fed funds futures trading, signaling traders expect another such giant tightening to come, This raises the probability that interest will reach 4% by the end of the year.
However, the market tries to rise, with the main stock indices in the green registering purchases, and low opening volumes slightly higher. The Dow Jones gained 171 points or 0.55%, the S&P 500 rose 18 points or 0.47% and the Nasdaq rose 54 points or 0.47%.
And it is possible that the rise in rates could have already been discounted.
With equities almost back to June lows, the tactical reward for risk feels better: complacency is gone, positioning is cleaner, technicals look oversold and rate expectations look more realistic. CNBC quoted in a report to Emmanuel Cau of Barclays (LON: BARC ).
It also indicates that confidence could begin to gain strength after inflation began to reflect some cooling, coupled with the decisive measures of the European Union to the energy crisis, could lift confidence.
“Another rebound is possible, but we still believe that stocks are still in a difficult situation,” the expert said.
Indeed, since the chairman of the US Federal Reserve, Jerome Powell, spoke from the Jackson Hole Symposium, expectations that the central bank could slow down in raising rates to avoid hitting harder have been deflated. to the economy
Since then, sales in the market have intensified and the falls have already been registered for three weeks. In fact, futures trading today was negative before the moves were reversed at the open.
Powell, far from stating that he would attempt the soft landing he spoke of earlier – placating inflation without causing a recession – ratifying his position of attacking rising prices as his priority over economic growth, even assuming that this could cause “pain” to families or companies.