The Dow Jones Index Today (September 20) at 9pm Thai time, the Dow Jones Industrial Average was at 30,647.42 points, minus 372.26 points or 1.2%, with all stocks down. Before the Federal Reserve (Fed) starts its monetary policy meeting on September 20-21.
CME Group’s FedWatch tool indicates investors weighed 82% that the Fed would raise interest rates from 0.75% to 3.00-3.25% at its September 20-21 meeting and gave an 18% weight on the Fed’s rise. Increase the interest rate by 1.00%
If the Fed raises interest rates by 0.75% in September, it will raise interest rates by 0.75% for the third time after raising 0.75% in both June and July. And if the Fed raises interest rates by 1.00%, it will be the largest rate hike in the past 40 years.
The research institute CFRA said that if the Fed raised interest rates by more than 0.75% during this week’s meeting. It would be too rigid a monetary policy. and it will bring down the Wall Street stock market.
“We think a 1% increase in interest rates will create a panic in the market. And it indicates that the Fed is overreacting to economic data. and reduce the chances of a gradual economic slowdown, ”CFRA analyst Sam Stowall said in the report.
Of the 56 interest rate hikes after World War II, the Fed only raised interest rates by 1% seven times, and after that, the S&P 500 fell 2.4% in one month, down by more than one percent. ‘1.3% at 3 months and recovered by 0.1% in 6 months
Additionally, Wall Street trading today was under pressure from rising US Treasury yields. among forecasts that the Fed will raise interest rates by 0.75-1.00% at this week’s monetary policy meeting.
The two-year US Treasury yield is sensitive to the Fed’s monetary policy. It has jumped above 3.9%, reached its highest since 2007 today, and is well above US Treasury yields at 10 and 30 years.
Short-term bond yields bounce higher than long-term yields As a result, the US bond market has an inverted yield curve, signaling a recession. Amid the Fed’s accelerating rate hike
US Treasury yields rebounded. After the US revealed inflation numbers that rose more than expected. This will be a factor that will help the Fed accelerate interest rate hikes.
According to a CNBC poll, Wall Street analysts predicted that The Fed will continue to raise interest rates until they hit the highest level. and will keep the interest rate at this level for some time. The Fed will use a “hike and hold” interest rate measure instead of the previously planned “hike and cut” measure.
The survey results indicated that Analysts expect the Fed to raise interest rates by 0.75% after the end of tomorrow’s meeting (September 21) and will continue to raise rates until reaching 4.26% at March. The Fed is expected to hold interest rates at that level for nearly 11 months, the average of analysts who expect the Fed to hold interest rates for three to two years.
Additionally, analysts say there is a 52% chance that the US economy will face a recession in the next 12 months. Due to the Fed’s too restrictive use of monetary policy.
At the same time, analysts say the Fed will take many more years. Before it managed to control inflation at its 2% target, the consumer price index (CPI) was forecast on an annual basis. It will remain at 6.8% at the end of 2022 and 3.6% at the end of 2023, before falling to the 2% target set by the Fed in 2024.
The disclosure of US economic numbers today. The U.S. Department of Commerce said Residential construction begins to rise 12.2% in August to 1.575 million, the highest level in two months and above analysts’ expectations of 1.445 million from 1.404 million. February.
The number of home construction start-ups increased more than expected in August. Despite the impact of rising building materials prices and the rebound in mortgage interest rates
However, housing permits fell 10.0% to 1,517 million units in August.
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