Reporters reported that The Dow Jones Index today (September 20) at 9:00 p.m. Thai time, the Dow Jones Industrial Average was at 30,647.42 points, minus 372.26 points or 1.2%, with all stocks falling. Before the Federal Reserve (Fed) will begin its monetary policy meeting on September 20-21.
The CME Group’s FedWatch Tool indicates that investors weighed 82% that the Fed would raise interest rates by 0.75% to 3.00-3.25% at its Sept. 20-21 meeting, and gave 18% weight to the Fed’s hike. Increase interest rate 1.00%
If the Fed raises interest rates by 0.75% in September, it will raise interest rates by 0.75% for the third time following raising 0.75% in both June and July. And if the Fed raises interest rates by 1.00%, it will be the biggest rate hike in 40 years.
The CFRA research institute said that if the Fed raised interest rates by more than 0.75% at its meeting this week. It would be too strict monetary policy. and will cause the Wall Street stock market to collapse.
“We think a 1% interest rate hike will create a panic in the market. And it indicates the Fed is overreacting to economic data. and reduce the chances of a gradual economic slowdown,” CFRA analyst Sam Stowall said in the report.
Of the 56 interest rate hikes following World War II, the Fed raised interest rates by 1% only seven times, and following that rate hike, the S&P 500 fell 2.4% in a month, down 1.3. % at 3 months and recovered by 0.1% in 6 months
Additionally, Wall Street trading today was pressured by a jump in US Treasury yields. amid the forecast that The Fed will raise interest rates 0.75-1.00% at this week’s monetary policy meeting.
The yield on the two-year US Treasury is sensitive to the Fed’s monetary policy. It jumped above 3.9 percent, hit its highest since 2007 today and is well above the 10-year and 30-year U.S. Treasury yields.
Short-term bond yields bounce higher than long-term As a result, the US bond market has an inverted yield curve, signaling a recession. Amid the Fed’s accelerating rate hike
US Treasury yields rebounded. After the US revealed inflation numbers that rose more than expected. This will be a factor supporting the Fed to speed up interest rate hikes.
According to a CNBC poll, Wall Street analysts predicted that The Fed will continue to raise interest rates until they hit their highest level. and will maintain the interest rate at this level for some time The Fed will use a “hike and hold” interest rate measure instead of the “hike and cut” measure previously predicted.
The survey results indicated that Analysts expect the Fed to raise interest rates by 0.75% following the end of its meeting tomorrow (Sept. 21), and it will continue raising rates until it hit 4.26 percent in March. 2023 The Fed is expected to keep interest rates at that level for nearly 11 months, the average of analysts who expect the Fed to hold interest rates for three to two years.
In addition, analysts say there is a 52 percent probability that the US economy will face a recession over the next 12 months. Due to the Fed’s use of monetary policy too tight.
At the same time, analysts say the Fed will take several more years. Before it succeeded in controlling inflation to its 2% target, the Consumer Price Index (CPI) on an annualized basis was expected. It will stay at 6.8% at the end of 2022 and 3.6% at the end of 2023, before falling to the Fed’s 2% target in 2024.
The disclosure of US economic numbers today. The US Commerce Department said Homebuilding starts jumping 12.2 percent in August to 1.575 million, the highest level in two months, and above analyst expectations of 1.445 million from 1.404 million in February. .
The number of home building start-ups increased more than expected in August. Despite the impact of rising construction materials prices and a rebound in mortgage interest rates
However, housing permits dropped 10.0% to 1.517 million units in August.
