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Find new investment opportunities based on Market Sentiment Indicator. Manage watchlist risk with leading indicator of volatility See what influential analysts and investors are saying about stocks in your watchlist
Most Trending
Most Trending
The trading week on Wall Street will commence, with the spotlight on the Fed's interest rate decision scheduled for Wednesday. The market's consensus is a 0.25% increase, bringing the rate to 5.25%. Meanwhile, on Thursday, the European Central Bank is set to announce their interest rate decision, with expectations for an increase to 3.75%.
Major banks and senior economists are in agreement that the economy is on the verge of a recession, although they hold differing views on its severity. This consensus on its impending arrival is an unusual occurrence. The Federal Reserve has been battling inflation for over a year, with the rate peaking at 9.1% before moderating to 5%. While this trend is positive, it is not sufficient for the Fed to consider lowering interest rates. The employment market remains robust, and the threat of a resurgence of inflation is still present and could be severe.
The Federal Reserve regards higher inflation as a more significant risk to the economy than a recession. Inflation is viewed as a major threat that could potentially lead to the economy's collapse and cause irreversible harm. As a result, the Fed is currently operating in a busy, complex, and captivating period that is closely tied to events on Wall Street.
The PCE Index, which is the Fed's preferred gauge of inflation, continues to indicate a cooling of the economy, with the overall inflation level declining from 5.0% in February to 4.2% in March. While the figure was slightly higher than analysts' consensus, core inflation also moderated from 4.7% to 4.6%, indicating a low inflationary trend when measured on an annual basis. Additionally, the Supercore inflation, which excludes housing and energy services, and is occasionally referenced by Fed Chairman Powell, only rose 0.2% during the month.
In the absence of hawkish comments from Fed officials, which could result in an increase in interest rate curves in the country, this week's announcement has been accompanied by significant volatility due to the inconsistent macroeconomic data. Currently, the Fed's expectations for Wednesday's announcement are set at slightly over an 80% probability of a 0.25% increase. The interest rate curve does not anticipate any additional hikes by the Fed in June, and the probability of a reduction in July is already priced in at around 20%, a significant deviation from the Fed's previous rhetoric.
The Fed is not expected to discuss the rate of interest rate increase, but rather the message that will be communicated. Private consumption in the economy, which has a significant impact on inflation, is growing at a high rate. The headline PCE inflation, which was released at the end of the week, decreased substantially in March from 5.1% to 4.2%, but core inflation has remained almost unchanged at 4.6% since the beginning of the year. Additionally, the cost of hiring employees has increased at a higher rate than anticipated in the first quarter, and the annual rate also remains very high.
It is estimated that in addition to an interest rate increase of 0.25%, it will most likely send a signal that if the inflation rate decreases in the following months, the interest rate may remain unchanged. That is, the Fed may send a message about the end of the interest rate hike process. We think that inflation will decrease in the coming months, but there is a high probability that the increase in interest rates will not be enough to return inflation to the target, which may lead to its return next year.
Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").
This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").
This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
