SMM News: at present, the market hopes that the Fed interest rate meeting in September can ease market pressure. If the Fed tightens its statement and adds pessimistic expectations for the economy, U. S. stocks are likely to continue to wobble for the rest of the year.
The Fed's two-day interest rate meeting is expected to end on Wednesday local time. During the interest rate meeting, the Fed will continue to fine-tune the monetary policy statement and determine how to use window guidance and update its outlook for the economy and interest rates in the coming period.
Prior to this, Federal Reserve Chairman Powell expounded the latest monetary policy position at the annual meeting of central banks around the world, announcing that inflation would be allowed to exceed the 2% target for a period of time to support the job market and economic recovery.
Analysts have different views on the judgment of the Fed's interest rate meeting:
Quincy Krosby, chief investment officer of Prudential Financial, said she doesn't think the Fed will continue to make a clearer statement on monetary policy, especially on how much Treasuries to buy, so the stock market may not perform too well. She believes the market is worried that the Fed will not provide a clear interpretation of the monetary policy plan.
Peter Boockvar, chief investment officer of Bleakley Advisory Group, believes that the Fed is unlikely to make significant changes to monetary policy and will continue to buy Treasuries at a rate of 80 billion a month.
BofA strategists said the bond market was closely watching changes in the Fed's balance sheet and its forward guidance, particularly adjustments to inflation policy. At present, the Fed has changed its policy of focusing on the target rate of inflation to average interest rates, which means that if inflation exceeds 2%, the Fed may not tighten monetary policy.
He also said the Fed's current policy changes could support higher back-end interest rates and steeper yield curves. This means that long-term bonds could be sold off if the Fed is not clear about its plan to buy Treasuries.
Marc Chandler, chief market strategist at Bannockburn Global Forex, said he thought the Fed's statement would be moderate, but Powell was unlikely to take a stand on bond buying targets or yield curve control. He also pointed out that the Fed's $7,000bn balance sheet had recently fallen by about $100 billion from its peak, and its bond purchases lagged far behind the ECB.
Chandler also believes that the Fed will continue to say that it is not worried about inflation. The Fed's bigger concern than inflation is the downside risks. The stock market is likely to remain volatile in the coming week, but it will not fall sharply. After all, if the Fed is partial, the dollar may fall, but this is good for the stock market.
Stock market volatility and declines have been significant over the past week. The weekly decline of 2.5% in the s & p 500 index also set a monthly record, while the weekly decline of 4.1% in the Nasdaq index was also the worst week since march. A large number of expiration of U. S. stock options next weekend is likely to exacerbate market volatility.
The Fed's meeting this week will be its last interest rate meeting before the general election. Analysts expect Federal Reserve Chairman Colin Powell to make every effort to stabilize the economy.
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