Urgent: Shocking statements from the Federal Reserve drive the market movement

Wall Street

Negativity dominated the main indices of the US market at the opening, especially after the statements of the Fed’s member Bullard, which did not come to the liking of the markets, which expect the Fed to retreat from the aggressive monetary tightening policy.

The dollar and the euro

The US dollar index is now declining by 0.43%, to record 101.703 against a basket of foreign currencies, most notably the euro, which is trading at 1.0834 against the US dollar, up by 0.42%.

US Treasury yields are also witnessing a collective decline, as yields on 10-year Treasury bonds fell by 3.69%, to record 3.404%, while yields on two-year Treasury bonds fell to 4.0972%, down by 2.26%.

Wall Street..starts to flop and look at Bitcoin

At the same time, the Nasdaq index witnessed a marginal decline, as it lost 0.02%, recording 11,093.18 points, while the Dow Jones index recorded 33,735.67 points, down by 0.52%, and the S&P 500 index, which includes the 500 largest companies in terms of capital, declined by 0.38%.

Bitcoin lost by 1.70%, to lose the levels of 21.5 thousand that it reached and return again below 21 thousand, to keep 21.5 thousand strong resistance for Bitcoin.

Gold and silver…reducing gains

Gold trimmed much of its intraday gains, rising only by 0.20% now, recording 1914.00 for futures contracts and $1911.79 for spot contracts, up 0.16%. As for silver futures, it is trading at $24.045 an ounce.

Federal remarks

Fed member Bullard said his interest rate forecast at the end of 2023 is for the 5.5% range. Adding that he believes that inflation will occur in 2023, but not as fast as the markets expect.

Regarding the Fed’s interest rate and its current policy, Bullard commented that it has become close to the strict levels, but it has not reached there yet, considering that it must rise to 5% to be called a tight monetary policy.

And Bullard expressed his fear that inflation will rebound, considering that the Fed’s survival on the more stringent side keeps it safe from this rebound and its consequences.

Pollard indicated that the global economy is improving, as Europe has succeeded in improving its situation and reducing the chances of exposure to a strong recession, as well as China’s return to the picture with the reopening, but this improvement may stimulate inflation to rise again.

Polader commented on the US GDP during the second half of 2022, saying that it came stronger than expectations, and that the chance of reaching US economic reform and a safe landing (soft landing) increased.

Bullard said that the Fed should raise interest rates to 5% levels as soon as possible and recommended an increase of 50 points at the next meeting.

Regarding the shift in the Fed’s policy, Bullard said that this is possible only if inflation rates fall dramatically and violently, as this may push the Fed’s members to back down from their previous recommendations regarding the continuation of the tight monetary policy.

Bullard stressed the importance of the Fed maintaining the market’s confidence in it, and that this will only be achieved by adhering to a strict monetary policy that guarantees a drop in inflation.

Regarding the Fed’s budget, Bullard saw that the process of reducing the budget is going well and there is no need to review it until the second half of 2023 or after that, saying that the budget reduction may continue even after stopping raising interest rates.

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