The Federal Reserve continues to increase interest rate hikes to deteriorate global economic prospects

On September 21, Powell, chairman of the Federal Reserve Committee, attended a press conference in Washington. Xinhua News Agency (Photo by Alexander Norton)

On the 21st, the Federal Reserve raised 75 basis points for the third consecutive time, driving the US dollar to rise. Data show that the US dollar index rarely increased by 1.65%on the 23rd. On the day, the city of exchange markets closed at 113.1890, rising to 20 years.

The US dollar has strengthened, followed by the promotion of interest rate hikes to be evil global economic prospects

Preliminary data released by S & P Global on the 23rd shows that the comprehensive index of the euro zone manufacturing and service industry purchasing managers in September continued to decline. The economic recession prospect of the euro zone fell 1.5%to the US dollar exchange rate to 1 to 0.97 on the day, refreshing the euro exchange rate to the US dollar exchange rate in the past 20 years.

As the British government announced a series of measures, including large -scale tax cuts on the 23rd, the market was worried about the British government's ability to manage liabilities in the British government, and then sold British Treasury bonds.

As the Fed and the US dollar dominate the global currency market, most countries take the Fed's monetary policy as an important consideration factors when formulating their national monetary policy. The monetary policy brought by the Fed's radical interest rate hike has rapidly shifted to force many countries to follow the Federal Reserve to raise interest rates in order to maintain the macroeconomic stability. The local currency is difficult to work.

In order to suppress inflation, the Swedish central bank announced on the 20th that the benchmark interest rate increased by 100 basis points to 1.75%. This is the maximum rate of benchmark interest rates since 1993. Subsequently, the Bank of Japan decided to maintain a loose monetary policy unchanged, but the Ministry of Finance of Japan rarely directly intervened in the foreign exchange market to prevent the yen from continuing to depreciate. The Swiss Central Bank raised 75 basis points on the 22nd, and the Bank of England raised interest rate hikes 50 basis points on the day.

The market believes that the trend of the depreciation of the local currency depends on the stop of the Fed's monetary policy steering or interest rate hike.

The Bank of America's Global Research Department said that the Bank of England's interest rate hike is unlikely to reverse the pound. Structural deficits and Brexit are likely to continue to make the pounds under pressure, and it is difficult to rebound quickly.

The Global Research Department of the Bank of America also stated that due to the differentiation of the US -Japan monetary policy and regular account imbalances, unilateral intervention is unlikely to reverse the rise of the US dollar to the yen exchange rate.

Burendan McKenner, an economist in the Wells Fargo Securities Company, said that as long as the trend of monetary policy of Japan and other economies is still different, the yen will be weakened further in the next three to six months or even longer.

Commercial Bank of the Netherlands stated that, in view of the European energy crisis that makes European high -volatility currencies such as Sweden Cran, the Swedish Central Bank tightened the monetary policy in the short term will make it difficult for Sweden to strengthen.

Analysts believe that the Fed's radical interest rate hike policy, geopolitical tension and global economic prospects are dim and heavy to avoid risk avoidance, and will bring support to the US dollar, resulting in the US dollar on some major currency exchange rates may still reach a new high in the near future.

Matt Weiller, director of the global research team of the online brokerage agency, said that the British economy has become more risk of stagnation in the next quarter than the US economy. If energy prices continue to rise or inflation, the European mainland economy will face a serious decline, which may accelerate the process of the British exchange rate to the US dollar to a parity process.

For emerging markets, the Bank of America's Global Research Department believes that there is no chance to see the opportunity of currency in emerging markets. The rise in financing costs and the slowdown of global growth is not optimistic for emerging market currencies. At the same time, geopolitical risks also put pressure on the currency of emerging markets.

Summary: The Fed's continuous radical rate hike expects the outlook for US stocks to deteriorate

The Federal Reserve announced on the 21st announced its interest rate hikes and stated that it would continue to reduce the holding of government bonds and institutional bonds, and is committed to allowing the inflation rate to return to the target of 2%. The economic prediction data released by the Federal Reserve after the interest rate meeting showed that rate hikes will last until 2023, and the economic growth rate will slow down significantly. Market analysts believe that the Fed shows the determination to reduce the risk of economic recession to reduce inflation, and it is expected that the US stock market will continue to undergo pressure.

The trend of the New York stock market reflected the market expectations on the 21st day: the three major stock indexes opened in the morning and narrowed the consolidation. As of the closing, the Dow Jones Industrial Average has fallen by 522.45 points from the previous trading day, and closed at 30183.78 points, a decline of 1.70%. The 500 stock index of the S & P was reduced by 66.00 points, closing at 3789.93 points, a decline of 1.71%. The Nasdaq Composite Index fell 204.86 points, closing at 11220.19 points, a decline of 1.79%.

According to the Federal Reserve's economic prediction data, the Federal Reserve officials have a median prediction of Federal Fund interest rates at the end of this year by 4.4%, which is significantly higher than the June forecast of 3.4%; the medium value of Federal Fund interest rates at the end of next year is 4.6%.

The market expects that in order to reduce inflation, the Fed may not take into account the economic cost, the US economy is declining or inevitable, and the prospect of corporate profitability will inevitably deteriorate.

Mark Kasana, head of the US Bond Strategy of Bank of America Global Research, said that the "eagle" signal released by the Federal Reserve is surprising, strengthening the expectations of the Fed's determination to control the risk of economic recession to control inflation.

Ruida Dalio, the founder of the world's largest hedge fund bridge water fund, said in an interview with the media on the 21st that to successfully control inflation, the Fed must continue to increase interest rates significantly. The benchmark interest rate needs to be raised to about 4.5%, and stocks and bonds will continue to be sold. The Global Research Department of the Bank of America predicts that the Fed will raise interest rates by 75 basis points in November, and will raise interest rates 50 basis points in December. In February and March next year, 25 basis points will be raised respectively. The Federal Reserve ’s interest rate interest rate interval will reach 4.75%to 5%, which is higher than the previous predicted 4%to 4.25%.

Affected by the Fed's continuous interest rate hike expectations, the US 2 -year Treasury yield exceeded 4.1%on the 21st, closed at 4.04%.

Jason Pladesman, chief investment officer of the private wealth of Grendmid Investment Company, said that in view of the continuous high and the Fed's attitude, the current stock market valuation premium seems unreasonable, and economic and corporate profits are facing substantial risks.

Lisa Sharlett, chief investment officer of Morgan Stanley Wealth Management Department, said that the process of fighting against inflation is far from over, and the duration of inflation pressure will exceed investor expectations and continue to form down pressure on the stock market. (Reporter: Liu Yan)

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