20.12.2022 18:10

Fed tried in vain: the market doesnt believe in miracles

Dear Clients and Partners!

Fed tried in vain: the market doesnt believe in miracles Inflation in the US is slowing down: statistics showed the fact better than forecast, but speculative optimism quickly died. The dollar soared 3%, but the S&P ended up just 0.73%. Investors are still wary of experimenting with interest rates.Large participants with real influence on quotes trust inflation figures more than Powell's aggressive tone. This fuels market scepticism and does not allow the dollar to strengthen much. Futures on the Fed funds rate show that markets are expecting a rate of 5% as early as May, which lags behind the pace announced by the Fed.But what happens to inflation?According to Biden, the return to price stability is the result of his team's economic plan. Interestingly, if the statistics turned out to be worse than the forecast, then who would be to blame?In fact, the CPI correction is due to the decline in the price of oil and the solution to the main problems in logistics. Since the beginning of the year, spot rates for container shipping from Asia have fallen by almost 75%. And we remind you that the reaction of the economy to the actions of the monetary regulator is always late. The consequences of the Fed's actions have not yet affected the country's economy, and now the regulator must take a break and wait for the result. The Fed is not yet ready to ease financial conditions: no one will cut rates quickly.Now the focus of investors' attention may shift from inflation to weak quarterly results of the corporate sector and the threat of a recession. Well, world politics will also add negativity. Let's be patient. The market consensus suggests a slowdown in the US economy already in the first half of 2023  let's see what Powell will fantasize about in 3-4 months.Profits to yall!#ForexChief #volatility #Fed #market #forexnews #stocks #worldnews #dollar #CPIcorrection

Sincerely yours,
ForexChief Team