Fed meeting looms as bears are in control…

The Fed is not the only central bank in focus this week.

Last week’s price action was a strong reminder for investors to avoid fighting the Federal Reserve. The S&P 500 and Nasdaq concluded the week down ~5% and ~6% respectively. The weekly equities downturn initiated, on Tuesday (13/09) after the release of August’s data showing that consumer prices increased unexpectedly—despite petrol prices falling ~10%.

The Fed’s two-day meeting starts tomorrow (20/09), with consensus expectations guiding for a 75bps interest rate hike to be announced. However, the less-probable scenario of a higher 100bps hike remains on the table as US inflation persists.

Investor jitters regarding global economic health were highlighted as FedEx sold-off ~21% (record one-day decline) following the CEO’s recession warning, citing volume declines in every segment globally. Furthermore, federal-funds futures trading suggests markets now expect the US central bank to increase main interest rate to 4.4% by March—from current 2.25-2.5%.

The Fed is not the only central bank in focus this week.

After a week’s delay following the death of Queen Elizabeth, the Bank of England (BoE) meets on Thursday (22/09) and is expected to rise rates another 50bps. On the same day, the Swiss National Bank, the Bank of Japan (BoJ), and Norway’s central bank are also holding policy-setting meetings.

Sources: Financial Times, Investing.com (economic calendar).

(Re-post of my original article written for Hellenic Asset Management)