Global markets are waiting for a hot week…the Fed will move everyone, and crucial data awaits By Investing.com


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Written by Noreen Burke

Investing.com – Global central banks are preparing to close out 2022 after aggressive rate hikes, primarily to fight inflation. The markets expect that the Federal Reserve will raise the interest rate by only half a point at next Wednesday’s meeting, and this is what concerns investors now and not the final limit for the Fed’s interest rate, which is expected to be higher than the estimates. The market should look at the consumer price inflation data released on Tuesday which will provide the market with clues on the Fed’s next plan. And with the inflation data and the Fed meeting, the US market will determine its direction for the end of this year. As for central banks from England and Europe, they are expected to raise rates by only 50 basis points as well. Here’s the most important thing to know before the week starts:

  1. Fed meeting

78% believe that by 50 basis points on Wednesday, with a probability of 21% for a rate hike of 75 basis points, based on the data released on Friday, which showed that producer prices rose more than expected during the past month.

The Federal Reserve raised interest rates this year by 375 basis points, including 75 basis points for 4 consecutive times, the fastest rate hike in 40 years, to counter rising inflation.

Chairman Jerome Powell is holding his final press conference for the year after making it clear at the end of last month that it was time for the Fed to slow down the rate hike.

While Fed funds futures indicate that the pace will slow, the final interest rate will be higher than previously estimated by Fed officials released last September. So it will be very important to focus on the final interest rate in 2023, after which the Fed will start cutting.

  1. consumer price index

Data will be released on Tuesday, and economists expect inflation to ease year-on-year from 7.7% to 7.3% in November.

There are concerns in the markets now about US jobs, which continue to be stronger than expected, and accompanied by an increase in wages, and this is what the Fed does not want to see.

Last Friday’s data also showed a limited rise in producer inflation prices last month with the increase in service costs, but the general trend of inflation is in a state of decline with the easing of supply chain crises and the peak in demand for goods.

Citigroup analyst Veronica Clark said in an interview with Reuters: “We will likely see a decline in commodity prices according to the November consumer price index given the decline in used car prices, but the new increase in core producer prices indicates that there are still upside risks to inflation during this period.” Next year.”

  1. US stocks

US stock markets are preparing for a strong dose of data with the release of inflation data and Fed data on two consecutive days.

The recent index recovery stalled with a stronger-than-expected PPI reading fueling expectations that interest rate hikes will continue for a longer period, which could lead the US economy into recession.

And if consumer price data comes out higher than expected, this will increase the strength of the Fed’s hawks and put pressure on stocks.

In an interview with Reuters, Tom Heinlein, a national strategic investment expert from US Bank Wealth Management, said: “If the inflation data came out higher than expected or did not decline from last month, this would not be in favor of a positive move for the stock markets.”

The markets know very well that the Fed will raise interest rates by 50 basis points, so attention will turn to the Fed’s expectations for the future interest rate and the final interest rate.

Traders will also listen to Jerome’s words and consider the possibility of the US economy falling into recession next year, which is now dominating market sentiment.

In light of this, here are the most important:

What awaits the American in light of the data:

What awaits those who are subjected to strong blows due to recession expectations and prices that take an opposite direction, taking advantage of the expected recession and the declines of the dollar index:

As for digital currencies, read:

  1. Bank of England
  2. Bank of England

A deteriorating economic outlook is unlikely to stop the {{ecl-||Bank of England}} hiking rates by 50 basis points to 3.5%, which would be the highest since 2008, when it meets on Thursday.

The UK’s economic outlook deteriorates, but that won’t drop a basis point to 3.5%, the highest interest rate since 2008, at Thursday’s meeting.

Issues that are likely to show inflation peaked at a 41-year high of 11.1% last October, more than 5 times the Bank of England’s target rate.

Energy prices caused most of the recorded increase in the index as a shock from the Russian-Ukrainian war, but there are other problems facing Britain, such as: the weakness of the labor market due to Brexit, and the repercussions of the Corona virus, which may push inflation to decline.

The British economy is heading towards recession, and the population is facing heavy blows to living standards after the government presented an aggressive budget attempt to restore Britain’s financial reputation.

  1. European Central Bank

At Thursday’s meeting, after the data released last month, which showed a decline in , inflation fell from 10.6% to 10%.

The European Central Bank raised interest rates by 200 basis points this year at the fastest rate ever, and inflation remains more than 5 times above the central bank’s target of 2%.

However there is a slowdown in rate hikes but the ECB is far from ending the tightening cycle and the markets will be looking at whether the 1.5% deposit rate will rise.

“Policy makers need to stick to an aggressive tone because they want inflation expectations to remain subdued,” Frederic Ducrozet of Pictet Wealth Management told Reuters.

— This report with a contribution from Reuters

locally:

The gold market remains turbulent in:

Egypt is awaiting its most important meeting with the International Monetary Fund after the black market exchange rate rose to 33 pounds per dollar, about 25% higher than the exchange rate at the Central Bank:

going down:

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