Investors will be focused on the US Federal Reserve this Wednesday as Federal Reserve decision makers are expected to raise the benchmark interest rate aggressively. The top US stock indices saw significant losses at the end of the week, and the Nasdaq composite had its worst start-up result in four months since 1971. The crypto markets have also had a tough week, as the crypto economy has fallen 8.99% against the US dollar since April 25. fell from $ 1[ads1].967 trillion to $ 1.79 trillion.
Fed expects to raise reference rate aggressively, Dutch bank ING predicts a 50bp increase and an announcement of QE tightening
A number of financial institutions, analysts and economists expect that the Federal Open Market Committee (FOMC) will raise interest rates next week in an aggressive manner. Reuters authors Lindsay Dunsmuir and Ann Saphir reported on Friday that there could be “large Fed interest rate hikes ahead”, and the authors also cite two reports claiming “hot inflation is at its peak”.
“The US Federal Reserve’s makers appear to be delivering a series of aggressive rate hikes at least until the summer to deal with high inflation and rising labor costs, although two reports on Friday showed preliminary signs that both may be on the rise,” he explains. the report.
In addition to the Reuters report, the Dutch multinational banking and finance company ING Group believes that a large increase will come this Wednesday. In the report, ING expects the FOMC and Fed Leader Jerome Powell to announce an increase of 50 basis points. ING’s report states that “inflation concerns outweigh temporary GDP declines.”
“The Federal Reserve is widely expected to raise its key interest rate by 50 basis points next Wednesday as 8% + inflation and a tight labor market trump the surprising decline in GDP in the first quarter attributed to temporary trade and stock challenges,” ING Group’s report published April 28 notes . While 50bp is a big increase, ING also believes that the Fed will reveal a tightening plan regarding the central bank’s monthly bond purchases.
“We will also look after the Fed formally announcing quantitative easing on Wednesday,” ING’s report details.
Wall Street gets beaten, gold reaps macroeconomic benefits
Meanwhile, when Wall Street ended the day on Friday, all the major US stock indices had suffered a bloodbath during intraday trading. The Nasdaq, Dow Jones Industrial Average, S&P 500 and NYSE all fell significantly before the weekend started. Reports show that the Nasdaq composite saw its worst four month start of over 50 years and the S&P 500 fell like a rock on Friday as well.
“By the end of trading on Friday, sales had deteriorated and we were staring at the worst start to a year since the Great Depression,” wrote Barron’s author Ben Levisohn.
Gold reaped the benefits of the storm at the end of the week, and the precious metal saw a steady rise against the US dollar heading into the weekend as well. On Saturday, an ounce of fine gold is up 0.08% and 6.47% in the last six months. Currently, one ounce of fine gold exchanges hands for $ 1896 per unit. Trend forecasts Gerald Celente believes that as long as inflation rises, precious metals will follow.
“The higher inflation rises, the higher the port rises gold and silver. And when Banksters raise interest rates, it will cause Wall Street and Main Street to fall very hard … and the harder they fall, the higher precious metal prices will rise, says Celente. twitret on Saturday.
Fear gives ‘Bear Market Vibes of 2018’, Bitfinex market analysts say crypto buyers remain on the sidelines
The crypto-economy also suffered this week, and the markets were correlated with the stock markets. Michaël van de Poppe, CEO and founder of eightglobal.com, tweeted about the fears in the crypto markets on Saturday. “The amount of fear in the markets at the moment due to the upcoming Fed meeting is comparable to the bear market vibes in 2018,” the Eightglobal founder so. “That says a lot for the markets and Bitcoin.” On Saturday night (ET) around 19:25 bitcoin (BTC) fell below the $ 38K mark to $ 37,597 per unit.
Since April 25, 2022, the net worth of the entire crypto-economy has fallen from $ 1.967 trillion to today’s $ 1.79 trillion. While the crypto-economy has lost 8.99% since then, it has lost 1.2% in the last 24 hours. Bitcoin (BTC) has lost 4.9% this week and ethereum (ETH) has lost 7.6% against the US dollar over the last seven days. In a note sent to Bitcoin.com News on Friday, Bitfinex market analysts explained that “bitcoin is in range-bound trading as buyers remain on the sidelines.”
“The day-to-day trading glow that is symptomatic of the lockdown – like so-called meme stocks pumped into above-ground valuations – already seems like a thing of the past,” analysts added. “Robinhood has cut employees in the middle of a fall in revenue as a bearish sentiment takes hold in the stock market. Nevertheless, it is interesting to note that the percentage of bitcoin supply that has been dormant for a year or more has reached new records this month, according to data from the chain analysis company Glassnode.
What do you think about the outlook for global markets such as gold, crypto and stocks? Do you think the Federal Reserve will raise the reference rate by 50bp? Tell us what you think about this topic in the comments section below.
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