Will the fall of the US stock market stop the Fed interest rate hike?
October 25, 2018 5:22 pm
On the eve of the US stock market, the second collapse occurred last week. Stock indices have gone negative since the beginning of the year, having an updated local minimum.
All this is observed against the background of strengthening the position of the American currency. The dollar index to the basket of six major currencies is now at its maximum since August and, apparently, can still grow significantly.
It is expected that in the first half of November, the most large-scale repayments of treasuries will take place, that is, more than $ 60 billion will leave the system almost overnight, which could lead to an increase in the dollar rate and further deterioration of market conditions in the United States.
According to experts, the current sale in the stock market, fueled, including concerns about the introduction of duties against US companies operating in the Middle Kingdom, is unlikely to force the Fed to abandon further monetary policy tightening in December, but can convince the regulator to revise plans to raise interest rates in the years 2019-2020.
“We believe that the fall in US stock indices could cause a slowdown in US economic growth next year. If sales continue, and stock prices drop another 10% in the fourth quarter (to about 2500 points on the S & P 500 index) and remain at that level, the negative impact on the US economy will be about 0.75% of GDP by the second quarter of 2019.” said analysts Goldman Sachs.
Earlier, representatives of Bank of America Merrill Lynch (BAML) said that the S & P 500 index should sank to at least 2500 points before the Fed will refrain from increasing interest rates.
The material has been provided by InstaForex Company – www.instaforex.com
On the eve of the US stock market, the second collapse occurred last week. Stock indices have gone negative since the beginning of the year, having an updated local minimum.
All this is observed against the background of strengthening the position of the American currency. The dollar index to the basket of six major currencies is now at its maximum since August and, apparently, can still grow significantly.
It is expected that in the first half of November, the most large-scale repayments of treasuries will take place, that is, more than $ 60 billion will leave the system almost overnight, which could lead to an increase in the dollar rate and further deterioration of market conditions in the United States.
According to experts, the current sale in the stock market, fueled, including concerns about the introduction of duties against US companies operating in the Middle Kingdom, is unlikely to force the Fed to abandon further monetary policy tightening in December, but can convince the regulator to revise plans to raise interest rates in the years 2019-2020.
“We believe that the fall in US stock indices could cause a slowdown in US economic growth next year. If sales continue, and stock prices drop another 10% in the fourth quarter (to about 2500 points on the S & P 500 index) and remain at that level, the negative impact on the US economy will be about 0.75% of GDP by the second quarter of 2019.” said analysts Goldman Sachs.
Earlier, representatives of Bank of America Merrill Lynch (BAML) said that the S & P 500 index should sank to at least 2500 points before the Fed will refrain from increasing interest rates.
The material has been provided by InstaForex Company – www.instaforex.com
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