Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Top Stories

THE MARKETS WILL SPOOK WITH ANY SURPRISES FROM THE FED
THE MARKETS WILL SPOOK WITH ANY SURPRISES FROM THE FED

Published : , on

Global financial markets will react with volatility if the Federal Reserve unveils any surprises today, affirms a leading analyst at one of the world’s leading financial advisory organisations.

Tom Elliott, deVere Group’s International Investment Strategist, is commenting ahead of the first Fed policy meeting under the new Chair, Jay Powell, at which the central bank is expected to raise interest rates.  The previous hike was in December 2017.

Mr Elliott observes: “Jay Powell is almost certain to announce a rate hike today of 25bp, taking the Fed Fund’s target rate from its current 1.25 per cent to 1.5 per cent up to a new range of 1.5 per cent to 1.75 per cent.

“Markets will not respond to the hike per se, since it has been widely anticipated. But they will respond to any surprises in the accompanying statement, which suggest a deviation from the expected three further rate hikes this year.”

He continues: “A cautious statement, that perhaps emphasises how moderate wage growth and inflation suggest further capacity in the economy for non-inflationary growth, will take pressure off bonds – yields will fall as prices rise – and support equities. Global bonds and stock markets will follow the U.S. markets in the rally. Growth-orientated stocks and sectors, and those with leverage, will outperform.

“But a statement that emphasises the inflationary risks of Trump’s tax cuts and raised import tariffs, and perhaps a comment of the need to pre-empt inflationary pressures through accelerated monetary tightening, will spook investors.

“A fourth rate hike this year will become priced into the markets, disruptive for bonds in particular but also for equities as a more aggressive Fed will have a negative impact on corporate profits. Financials will benefit from wider interest rate spreads, as will more defensive parts of the stock market.”

Mr Elliott goes on to say: “Investors will also be looking for word on the Fed’s quantitative easing (QE) program.

“The sheer size of the program makes its unwinding potentially hazardous for financial markets. Will the Fed continue to unwind the program by $10bn a month, taking the Fed’s balance sheet slowly down from its a peak of $4.5 trillion, to Powell’s stated aim of $2.5 tr to $3 trin four years? Or will it accelerate the unwinding, if Powell decides to use the unwinding of QE as an active policy tool by which to take liquidity out of the economy?

“He could, for instance, start actively selling bonds in the market in addition to not replacing expiring bonds. Since this will coincide with the Treasury issuing ever-more bonds to finance the widening budget deficit, an over-supply of Treasuries may disrupt financial markets.”

The Federal Reserve announcement is scheduled for 2 p.m. ET.

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post