Dow futures fell nearly 100 points before the Federal Reserve (Fed) kicked off its monetary policy meeting today. It is expected that the Fed will accelerate the rate hike to curb inflation.
As of 6:12 p.m. Thai time, the Dow Jones Industrial Average is down 92 points or 0.3% to 31,025 points.
Wall Street trading is expected to be pressured by a rebound 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 two-year US Treasury bonds 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.
The latest 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 weighted 18% that the Fed would. Raised interest rates 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
By InfoQuest News Agency (20 Sep 65)
Tags: Dow futures
