The fed meeting: what markets expect and what worries investors?

  • And
  • +A

The Central event of this week’s fed policy meeting on 25 and 26 September. The rate decision will be announced tomorrow at 21:00 GMT. Until the end of the year there will be two more meetings on 8 November and 19 December. Intrigue regarding the key rates are virtually none: on the basis of quotations of futures, market participants estimate the probability of a rate hike at this meeting, 95%, and December – 80%. Thus, by the end of the year the rate will be raised to 2.5%. The rate increase is already priced in all the tools, surprise it will not.
The focus will be on the press conference of the head of the fed Jerome Powell on assessment of the current state of the us economy, inflation and the labor market, and further monetary policy. In particular, market participants are concerned with how increases in rates to expect from the Federal reserve in 2019.
Now some investors are concerned about the growth of yield US Treasures – yesterday the yield on 10-year U.S. bond hit a six-year high, rising to 3,106%. It is noteworthy that this comes amid regular updates of the highs of the us stock indices. This disturbing factor, which may be a harbinger of the U.S. stock market. Interestingly, over the past month, the dollar index DXY fell 3%. In any case, the results of the fed meeting will define the dynamics of the exchange markets in the medium term.
___________
Roman Tkachuk,
Senior analyst,
Alpari