Investors will focus on the US central bank this Wednesday as policymakers at the Federal Reserve are expected to aggressively raise the benchmark interest rate. Top US stock indexes saw significant losses at the end of the week, and the Nasdaq Composite saw its worst four-month opening performance since 1971. The crypto markets have also had a rough week, with the crypto economy declining by 8.99%. The US dollar has fallen from $1.967 trillion to $1.79 trillion since April 25.
Fed expected to aggressively raise benchmark interest rate, Dutch bank ING predicts 50bp hike and QE tightening
Many financial institutions, analysts and economists expect the Federal Open Market Committee (FOMC) to aggressively raise interest rates next week. Reuters writers Lindsay Dunsmuir and Ann Safir reported Friday that there could be “big Fed rate hikes ahead” and the authors also cited two reports that claim “warm inflation is peaking.”
“U.S. Federal Reserve policy makers are prepared to deliver a series of aggressive interest rate hikes until at least the summer to deal with rising inflation and rising labor costs,” the report said. Two reports on Friday suggested that both could be peaking.”
In addition to the Reuters report, Dutch multinational banking and financial services corporation ING Group believes there will be a major hike this Wednesday. In the report, ING expects the FOMC and Fed Chair Jerome Powell to announce an increase of 50 basis points. The ING report says that “inflation concerns outweigh temporary GDP declines.”
The ING Group report, published on April 28, said, “The Federal Reserve is widely expected to raise its policy rate by 50 basis points next Wednesday as 8%+ inflation and a tight labor market created temporary tradeoffs.” And has surprised 1Q GDP contraction thanks to inventory challenges.” notes. While 50bp is a big increase, ING also believes the Fed will unveil a tighter plan when it comes to the central bank’s monthly bond purchases.
“We will seek the Fed to formally announce a quantitative tightening on Wednesday,” the ING report details.
Wall Street beats, gold reaps macroeconomic gains
Meanwhile, when Wall Street closed the day on Friday, all major US stock indexes were battered by bloodshed during the intraday trading session. The Nasdaq, Dow Jones Industrial Average, S&P 500 and NYSE all declined significantly ahead of the start of the weekend. reports Show Nasdaq Composite Viewed Worst start of four months In more than 50 years and the S&P 500 fell like a rock on Friday as well.
“By the end of trading on Friday, the sell-off had worsened and we were off to the worst one year since the Great Depression,” wrote Ben Levison, author of Barron’s.
Gold benefited from the storm at the end of the week and the precious metal saw a steady rise against the US Dollar over the weekend as well. On Saturday, one ounce of fine gold is up 0.08% and 6.47% in the past six months. Currently, one ounce of fine gold is trading at $ 1,896 per unit. Trend forecaster Gerald Celente believes precious metals will follow as long as inflation rises.
“High inflation rises, high safe-asset gold and silver rise. And, when Bankster raises interest rates, it will bring Wall Street and Main Street down very hard … and the more they fall, the more expensive the precious metal.” The higher the prices go up,” Celente tweeted on Saturday.
Bitfinex Market Analysts Say Fear Gives ‘2018 Bear Market Vibes’ Crypto Buyers Say They’re on the Edge
The crypto economy also took a hit this week and the markets were correlated with the equity markets. Michael van de Pope, CEO and founder of EightGlobal.com, tweeted on Saturday about the fear in the crypto markets. “The amount of fear in the markets at present due to the upcoming FED meeting is comparable to the bear market in 2018,” said Eight Global Founder said, “It tells a lot for the markets and for bitcoin.” At around 7:25 pm on Saturday evening (ET), Bitcoin (BTC) fell below the $38K mark to $37,597 per unit.
Since April 25, 2022, the net worth of the entire crypto economy has fallen from $1.967 trillion to $1.79 trillion today. While the crypto economy has declined by 8.99%, it has since declined by 1.2% during the past 24 hours. Bitcoin (BTC) is down 4.9% this week and Ethereum (ETH) is down 7.6% against the US Dollar over the past seven days. In a note sent Friday to Bitcoin.com News, Bitfinex market analysts noted that “Bitcoin is in a range-bound trade as buyers remain on edge.”
“Lockdown symptoms in day trading – which were seen to trace the so-called meme stock pump – are already a thing of the past,” analysts said. “Robinhood has cut staff amid declining revenue as there is a bearish sentiment in the stock market. Still, it is interesting to note that the percentage of bitcoin supply that has been idle for a year or more reached new all-time highs this month, according to data from on-chain analytics firm Glassnode.
What do you think about the outlook regarding global markets like gold, crypto and stocks? Do you think the Federal Reserve will raise the benchmark rate by 50bp? Let us know what you think about this topic in the comment section below.
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