ការដំឡើងអត្រា Monster មួយផ្សេងទៀតកំពុងស្ថិតនៅលើផ្លូវ

The Federal Reserve is ready to pull the trigger on another 75 basis point rate hike this week.

On Wednesday, the U.S. central bank’s Federal Open Market Committee will meet before announcing its latest monetary policy decision. The FOMC will likely raise rates by three-quarters of a percent for a third straight meeting, according to economists and market-based estimates.

That would push the federal funds rate up to a range of 3% to 3.25%, the highest since 2008.

There were hopes that the Fed would slow the pace of hikes, perhaps by lifting rates “only” 50 basis points. Those hopes were dashed following the release last week of hotter-than-expected inflation data for August.

That consumer price index report, which showed an acceleration in core consumer prices (prices outside of food and energy), raised worries that inflation is rooting deeply in the economy, and the Fed would lift rates higher than previously thought.

Rate Hike Expectations Jump 

Probabilities based on fed funds futures suggest an 18% chance the U.S. central bank will surprise markets with a full percentage point hike this week.

Markets expect the federal funds rate to reach a range of 4.25% to 4.5% by December before peaking at 4.5% to 4.75% in March.

Those expectations imply the fed lifting rates another 75 basis points in November before finally slowing in the coming months.

A fed funds rate above 4% isn’t something markets were pricing in as recently as last week. Before the latest CPI reading, the narrative was that inflation was still high but that it had “peaked” and would slowly come down. 
 
That narrative hasn’t necessarily been discarded, but it’s on shaky ground after prices for key categories like medical care and shelter zoomed higher last month.

Powell Press Conference

In addition to seeing whether the Fed follows through with another 75 basis point rate hike (or something bigger), investors will be keyed in on Fed Chair Powell’s post-decision press conference at 2:30 ET on Sept. 21. They’ll be listening for clues on whether the markets are on the right track by pricing in a terminal rate (the highest federal funds rate of the cycle) of around 4.5% or if there’s the potential for even higher interest rates.

រឿងរ៉ាវនៅតែបន្ត

Powell is well-aware of the lag between interest rate hikes and their impact on the economy. That’s why some people have cautioned Powell and the Fed to be careful not to move rates too high before the effects on the economy are clear.

Too much could push the economy into a recession; doing too little may ingrain inflation in the economy, forcing more drastic action in the future.

ប្រតិកម្មទីផ្សារ

For their part, markets haven’t liked the idea that rates are likely headed to 4% or more, but they’ve digested them relatively well so far. The two-year Treasury bond yield surged to 3.97% on Monday, the loftiest point since 2007.

But yields on longer-term Treasuries, like the 10-year and 30-year, have been more contained. With both around 3.5%, they are just above the highs they reached in June.

Similarly, prices for the iShares 7-10 ឆ្នាំប័ណ្ណរតនាគារ ETF (IEF) និង iShares 20 + ឆ្នាំរតនាគាររតនាភិបាល ETF (TLT) are hanging around the lows they were at in June (bond prices and yields move inversely).

Meanwhile, stocks plunged on the day of the August CPI report, as traders realized higher rates were coming. The អេសឌីអេសអេស & ភី ៥ អ៊ីអេហ្វអិលជឿទុកចិត្ត (ចារកម្ម) និង អ៊ីនវេស្កូ QQQ ​​ទុកចិត្ត (QQQ) បាត់បង់ 4.4% និង 5.5% រៀងគ្នា។

But on the plus side, prices for both ETFs, which track the S&P 500 and the Nasdaq-100, respectively, are holding above their June lows. This week’s Fed decision and Powell’s press conference will play a role in determining whether or not those lows continue to hold.

អ៊ីមែល Sumit Roy នៅ [អ៊ីមែលការពារ] ឬតាមដានគាត់តាម Twitter @sumitroy2

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