FOMC Response: Hard Landing Will Lead to Pause, Housing Market Cools, Putin Escalates, Bitcoin Stabilizes – MarketPulse | Jewelry Dukan

Stocks initially tumbled after the Fed continued to push hard to win the war on inflation. The Fed is taking no chances on inflation and is willing to send this economy into recession. Goodbye soft landing, Wall Street is gearing up for a hard landing. The Fed delivered a third straight rate hike of 75 basis points and signaled that it expects the federal funds rate to rise to 4.6% this cycle. The updated staffing forecasts were a bit more restrictive than many had anticipated. The Fed expects unemployment to rise to 4.4% next year and to keep rates high, eventually cutting them to 3.9% by 2024.

Stocks rallied during Powell’s news conference as the Fed’s economic pain level appears to be somewhat limited. There will be softer working conditions, but it seems a lull will come fairly quickly sometime mid-next year.​

Powell noted that the FOMC is splitting between 100 and 125 basis points of rate hikes for the rest of the year. The tightening peak is near, and that should be good news for risky assets.​

Housing

Existing home sales in the US declined slightly in August, but further weakness emerges as mortgage rates continue to rise, consumers falter and the economy looks increasingly likely to slip into recession. Home sales fell to 4.80 million, the seventh straight monthly decline.​ The housing market will continue to cool, particularly given yesterday’s falling building permit data and the 30-year fixed-rate mortgage rate rising to 6.25%.​

Putin ups the ante

Russian President Putin’s recent escalation has shaken financial markets.​ Putin announced the immediate “partial mobilization” of Russian citizens, noting that they would use “all the means at our disposal,” increasing the risk of nuclear weapons being used. Putin is evidently frustrated by Ukraine’s counter-offensive and retake of territories.​ Investors are concerned that a major escalation could be imminent that would weigh on European assets.​

crypto

The post-Fed crypto reaction was initially weak as the hawkish stance was confirmed by Fed Chair Powell. Bitcoin found support at the $18,800 level as Wall Street gains confidence in its handle on the level of Fed interest rates.

On Wall Street, Nomura, Japan’s largest broker, also continued its push into crypto. Steven Ashley joins from Nomura’s Head of Wholesale Division and Executive Officer to become Chairman of Laser Digital Holdings AG1, Nomura’s new digital assets company. Nomura was expected to make a splash in the digital asset industry, and insiders aren’t surprised that Ashley will lead the way.​

This article is for general informational purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily those of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited money.

Ed Moya has over 20 years of trading experience and is a Senior Market Analyst at OANDA. He provides up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policy and market reactions to corporate news. His particular expertise lies across a wide range of asset classes, including forex, commodities, fixed income, equities and cryptocurrencies. Throughout his career, Ed has worked with some of Wall Street’s leading forex brokers, research teams and news outlets including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked at TradeTheNews.com providing market analysis of economic data and company news. Ed lives in New York and is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most respected global news outlets, including Reuters, Bloomberg and the Associated Press, and he is regularly cited in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed has a BA in Economics from Rutgers University.

Ed Moya

Ed Moya

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