The main question of the markets: the Fed will cease to be patient?
Analysts on Wall Street
like to say that the Federal Reserve
system “patient” in raising
interest rates. after the financial
Fed crisis introduced practically zero
interest rates and still not touch
their. These low rates have been the main
the driving force behind growth stocks around
200% from the beginning of March 2009, but the period
low interest is about to come to an end.
The only question is when it will happen.
Fed holds regular meeting
Tuesday-Wednesday. All the attention of the market
will be focused on one thing – whether
“Removed” one critical word –
“Patiently” – from the official statement
Monetary policy adjustments.
If this word will be removed, then the Fed
is preparing to raise interest rates
in June – a bit earlier than many
What will be the reaction of
market? It must be said that the stock market
already behaving nervously, as
investors adapt to the new
world order. It is one thing – to know
exactly what the rate hike will be in
such a time. Another thing, when
You only approximate date – June, and
the terms of these are based only on conjecture.
Perhaps the time for
New Fed statement is not perfect: three
of the last six days, the Dow fell.
Some say that this is the last
such “American” hills on the market and
It originated in the fact that the Fed is so
and it does not give a clear enough statement of
their plans. "This uncertainty is depressing:
the market does not know exactly what to expect from the Fed".
– says John Canali, Chief Economist
of LPL Financial in Boston.
This is silly, of course,
fixate on one word, but the markets
really can go crazy when the Fed changed its statement. when the central
the bank added the word "patient" at
his statement about raising interest
rate on 17 December, the Dow Jones
I showed one of the best
its results in the past year. Then officials
the regulator said that the Fed may be
patient before normalization
monetary policy". It was
regarded by many as a sign that
The Fed will not raise rates during the
several months. If the Fed is now
removes the word and will not be "patient".
it will greatly affect the mood
Wall Street and many markets abroad.
Here is one version of who wins and who
lose from such a declaration.
If the Fed will change its
wording, it would mean that
Fed Chairman Janet Yellen and members
Commission believe the US economy’s health. increase
interest rates will be a welcome
Fed action on the economy. Nevertheless
It is time to give people who have stayed
at least some interest in banks, opportunity
earn on their deposits. But there is a catch: the rise
wages are still sluggish in
many areas, and therefore there is concern
the rate hike could hurt
strike on future growth. And that’s why
Now wages – central
signal for the Fed about when to raise
Hard blow for
Corporate America – Wall Street
actually very afraid of raising
Rates, as teenagers are afraid of the police.
Bull market has only just
six years old (one of the most
longest in US history) and experts believe
that the rate hike will end an era
record corporate profits. shares
now quite expensive, and many
investors are confident that the market is waiting for
correction of this year (the stock will collapse
10% or more). Increasing rates of the Fed
can tame the markets even more. This week should
pay attention to how the S P 500
Other markets will react on Wednesday
Yellen speech at the press conference.
Despite her monotonous voice,
Yellen comments almost always cause
excitement among investors.
The cast for the world: interest
US interest rates affect all world markets.
The foreign market grew, the Fed added
the same word "patient" in his
statement in December. The Japanese index
Nikkei, German DAX, British FTSE 100 rose
more than 2% after the Fed announcement.
The Fed will remove the word in the environment and thus
It will give a strong signal to raise interest
rates, many foreign markets could
greatly moved. There is also a concern,
the rate hike may slow
growth markets for some time, although
it is a good thing in the long run. the
However, US investors
steadily withdrawing money abroad
especially in Europe and Asia. After all, the European
the central bank launched its own
incentive program, which
Investors welcomed with pleasure.
Yet any surge is likely to
It is short-lived. The Fed will not be deliberately
ruin the economy of the United
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