The miracle did not happen – as expected, the US regulator is up 25 basis points to 4.5-4.75%. The trend towards tightening monetary policy also continues. Translating into Russian, in March, most likely, history will repeat itself.
Powell’s performance wasn’t surprising either. According to the chairman of the Fed, “the central bank still has work to do”, “monetary tightening will continue”, and there is still a wagon and a small cart before the return to price stability.
Raising the rate, perhaps, there will be not one, but two more times ahead. And what – 5.25 ahead? I don’t believe it. And the market too.
It would seem that there is nothing to rejoice, however:
▪️ (^GSPC) up 1.05%,
▪️ (^DJI) at 0.02%,
▪️ Composite (^IXIC) на 2,00%, а
▪️ (^RUT) at 2.18%.
▪️ Yields on , in turn, decreased by more than 3%.
The question is, where did such a frenetic enthusiasm in the markets come from?
Probably, investors reacted to the words of the head of the Fed about “tightening financial conditions” in the country. The catch is that the labor market remains overheated: the number rose to 11 million in December from 10.4 million a month earlier.
Another trigger for the growth of the market could be the announcement that a “soft landing” of the economy is still possible. Is this a reason to rejoice? Maybe. Or maybe just the manipulation of big players and an elementary short squeeze?
Powell declared the inexpediency of the transition to a soft monetary policy. Not all of this looks like a pigeon cooing.
In short, we continue to monitor macroeconomic indicators.
What about the forecasts?
Traders rely on at least one decline rates until the end of 2023. Mike Wilson of Morgan Stanley, in turn, believes that the Fed will raise rates longer than the market expects. This could end up being a severe disappointment for the markets.
But all this will come later. What now?
Crazy enthusiasm.
✔️ The ten-year yield fell to 3.40.
✔️ The dollar, again, contrary to forecasts, fell below 101 on .
In short, RISK ON in all its glory.
✔️ Well. Prior to that, it gave hints of a possible correction on the way up. And… soared to new heights. Already 1955. Although this is within the framework of expectations.
What will I do? About this – detailed.
