© Reuters.
Investing.com – The US Federal Reserve is expected to raise its target range for federal funds by 50 basis points, to the highest level since 2007. You have to follow the instructions of its boss Jerome Powell and the infamous “scatterplot”. The market is anticipating the decision, but reacted weakly to Tuesday’s positive CPI data, suggesting that much of the impending dovish reversal has already been priced in. China has stopped counting COVID-19 cases as waiting lists for treatment outside hospitals. Apple is ready to allow third-party iPhone app stores in Europe, which has taken a tougher antitrust stance than the US on high-fee policies. Oil prices are rebounding as the IEA warned that the market will remain tight next year. The main focus today will be on US oil reserves data. Here’s what you need to know about the financial market on Wednesday December 14th.
1. 75 to 50: The Fed’s dovish turn begins
As expected, at the Fed meeting, the target range for the federal funds rate will be increased by 50 basis points to a cap of 4.5%. This is considered more or less certain, so the key variable, as always, will be Fed Chairman Jerome Powell’s press conference instructions and new forecasts coming from the central bank.
The market has pretty much accepted the notion that the slowdown in the pace of tightening – i.e. rate cuts by 75 basis points at each of the last 4 meetings – is the beginning of the end of this cycle: 10-year yields are already down 75 basis points from the October peak.
How long it will take for the rate to “peak” remains an open question, but that day appears to be fast approaching after data showed core inflation fell to 7.1% in November, its lowest level so far this week. ‘year. It has been down for 5 consecutive months after peaking at over 9%.
2. China stopped counting COVID-19 cases
Chinese authorities have said they will stop releasing comprehensive data on new COVID-19 cases, effectively admitting that the official numbers no longer make sense. On Tuesday, China reported just over 2,000 new infections, while Hong Kong, which is only a small fraction of the mainland’s population, reported about 15,000 cases.
China’s National Health Commission said the country would only report symptomatic cases in the future.
The measure is a sign that COVID-19 is spreading faster than authorities can monitor, following a rapid relaxation of testing and quarantine requirements. This sets the stage for an interesting social experiment, as it could allow the world to see the degree of voluntary restraint exercised by citizens under less restrictive conditions when the disease is still spreading rapidly.
3. US stock market drifts ahead of Powell press conference; Apple’s app store domain has cracked
US stocks will fall ahead of the Fed’s decision release at 2 PM ET (7 PM GMT) and Powell’s press conference half an hour later. However, they will open on a somewhat gloomy tone after the weak market reaction to Tuesday’s positive CPI news showed that much has already been decided.
As of 6:30 am ET, it was down 25 points, or 0.1%, and the S&P 500 futures were down a similar amount, and na was down 0.2%.
One stock likely to be in the spotlight a little later is Apple (NASDAQ: ) following news that the company plans to allow third-party app stores on the iPhone in Europe to avert antitrust action against it in the ‘EU. This development, if repeated in the United States and other countries, will lead to a reduction in the company’s profit stream.
This will breathe new life into the controversy over high fees for app store purchases following Elon Musk’s high-profile dispute with Apple earlier this month.
4. Cryptocurrencies have stabilized after the problems at Binance
Calm has returned to the cryptocurrency market after the world’s largest cryptocurrency exchange, Binance, as promised, lifted its withdrawal suspension and returned to “business as usual,” according to its founder Changpeng Zhao. tested, but failed to clear the $18,000 level.
Concerns about Binance’s credibility continue after Mazars’ “proof of reserve” attestation last week failed to convince, with a recent report from Reuters also resurrecting concerns about possible legal risk.
The legal risks for cryptocurrencies have risen sharply after Sam Bankman-Fried was arrested and jailed in the Bahamas awaiting extradition to the United States to face fraud charges.
5. Oil Price Increased After IEA Report; data expected on oil reserves from the EIA
Crude prices rose after the International Energy Agency said the oil market is expected to remain tight next year; however, the risk of a recovery in demand in China is still very high. The agency expects demand to grow by 2.3 million bpd this year and another 1.7 million bpd in 2023.
The IEA also confirmed an analysis by the Organization of the Petroleum Exporting Countries that showed OPEC production fell by about 500,000 barrels a day in November.
Next, market attention is likely to focus on the level of oil inventories in the US, after the American Petroleum Institute reported an unexpected increase in oil and gasoline inventories last week. As of 6:45 am ET, na futures were up 1.0% to $76.16 a barrel and 0.9% to $81.44 a barrel.
Written by Geoffrey Smith
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