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Fed vs Market: Who gonna win?Hi everyone, just share some thoughts regarding to the FOMC's meeting last week: - Fed's rate hike with 0.25% as expected after considering 1% before the pre-bank-crisis events and 0% for post-events. It's more logical for me than any other option, as inflation is still high, the labor market is still hot, and the economy is still boosted with hyped capital goods from January through February. - The only things that make me feel confident are the tightening financial conditions at banks and other financial institutions. This showed a dramatic U-turn compared to before the banking crisis, and this is in line with what the Fed wishes for. - However, looking at the Fed Funds futures, we have some discrepancies between the median of Dot plot (a method of visually representing expectations of the future Fed Funds rate) and the Fed Funds futures. While Fed fund futures are implying a rate easing right in 2023 to around 4.25% and dot plots show expectation from the Fed to keep the rate after one more hike, as Powel said. - This gap of expectation between the Fed and the "market" out there shows the disbelief in the current situation of the economy in the next few months, especially after the banking crisis in the last 2 weeks. The crowd predicted that the economy would face such severe financial difficulties that the Fed would change its policy. So who's going to be right? Fed or the Market? Whatever side you choose, make your bets there.
TVC:DXY
by DatTong
The Ten Fundamental Objectives of the Federal ReserveIntroduction The Federal Reserve System, often referred to as "the Fed," was established in 1913 in response to a series of banking panics. As the central banking institution of the United States, it plays a crucial role in maintaining the stability and integrity of the nation's monetary and financial systems. This essay explores the ten fundamental objectives of the Federal Reserve, which include maintaining price stability, promoting full employment, and ensuring a stable financial system, among others. 1. Price Stability The primary objective of the Federal Reserve is to maintain price stability, which refers to a low and stable rate of inflation. By managing inflation, the Fed helps to preserve the purchasing power of money, ensuring that consumers and businesses can make informed decisions regarding spending, saving, and investment. 2. Maximum Sustainable Employment Another key objective of the Federal Reserve is to promote maximum sustainable employment, also known as full employment. This means providing enough job opportunities for all individuals who are willing and able to work, while minimizing the rate of unemployment. By promoting full employment, the Fed contributes to overall economic growth and well-being. 3. Moderate Long-Term Interest Rates The Federal Reserve aims to maintain moderate long-term interest rates, which are essential for economic growth and stability. By controlling short-term interest rates, the Fed can indirectly influence long-term rates, thereby encouraging borrowing, investment, and consumption. 4. Financial System Stability One of the most critical objectives of the Federal Reserve is ensuring the stability of the financial system, which involves monitoring and regulating financial institutions, as well as identifying and addressing potential risks. By maintaining a stable financial system, the Fed helps to prevent crises and protect the economy from shocks. 5. Efficient Payment and Settlement System The Federal Reserve is responsible for managing the nation's payment and settlement systems, which include check clearing, electronic funds transfers, and automated clearinghouse operations. By providing these services efficiently and securely, the Fed ensures that financial transactions occur smoothly, promoting confidence in the banking system. 6. Consumer Protection Another important objective of the Federal Reserve is to protect consumers by enforcing federal consumer protection laws and regulations. This includes monitoring financial institutions for compliance, addressing consumer complaints, and providing education and resources to help consumers make informed financial decisions. 7. Supervision and Regulation The Federal Reserve plays a vital role in supervising and regulating financial institutions to ensure their safety, soundness, and compliance with laws and regulations. This oversight helps to maintain a stable and resilient financial system, while also protecting consumers and investors. 8. Community Development The Federal Reserve is committed to promoting community development by supporting initiatives that address issues such as affordable housing, small business development, and workforce development. This objective aims to foster economic growth and improve the quality of life in communities across the country. 9. Economic Research and Analysis The Federal Reserve conducts extensive research and analysis to better understand the U.S. economy, as well as the global economy. This research informs the Fed's monetary policy decisions and helps it to fulfill its other objectives, such as promoting maximum employment and maintaining stable prices. 10. International Financial Cooperation Finally, the Federal Reserve cooperates with other central banks and international financial institutions to promote global economic stability and financial system resilience. This collaboration allows the Fed to share information, resources, and expertise, ultimately benefiting the U.S. economy. Conclusion The Federal Reserve plays a pivotal role in the U.S. economy by pursuing ten fundamental objectives, which range from maintaining price stability to promoting international financial cooperation. By fulfilling these objectives, the Fed ensures the stability and growth of the U.S. economy, while also fostering a resilient and efficient global financial system. Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
FRED:FEDFUNDSEducation
by financialflagship
11
SP-500 - Banking crisisYou might have wondered about the past ~400 days in the financial market, especially in the US and Europe. Numerous commentaries and opinions have been shared across business-related media regarding interest rates, inflation, oil prices, war, etc. Trust me; you are not alone! Even the most distinguished economic Nobel prize winners have yet to learn why the economic indicators are still stable with so many factors in place. You might have heard of the recent banking failure in the US and Switzerland and that the banking system is so strong that nothing similar to 2008 would happen. But you have yet to hear that this time is expected to be worse!! Milad opinion: In the next 40 days, till the first week of May, we will see multiple failures in the financial system and corporates with weak management, and we will see the tight unemployment rate finally cracking up. But this will be just the beginning of many failures to come. To explain this more clearly, in the past 15 years, we have seen a secular bull market that has pomped the asset prices to a level never seen before, leading to an everything bubble. As a result, we have seen the tech sector and related assets grow to an unsustainable level, and housing prices soar. But this fast growth has come to an end, and in the next 40 days, we will see a downfall of significant indexes to at least 30% to begin with, resulting in a tough landing. The bases are as follows: The banking crisis of 1907 and 2008 indicate a massive downfall of 30% or more, starting shortly after banks' failures. As the Fed Chairman touched on in today's Q&A, the credit market is falling, starting from Credit Swiss, and will be tightened further. This could threaten the housing market, which is already unstable. The 1974, 2002, and 2008 crashes indicate that the final drop should occur here. The downfall for SP500 shows 30% to 41% drop in the next 40 days. A historical unemployment rate study indicates a sudden jump in the following two readings. The bond market inversion (10s-2s) and (10s-3months) indicate that the recession is very close. Analyst Sentiment Measure of earnings among US companies indicates an extreme reading is coming, which means a significant drop in earning expectations. Leading Economic Indicator (LEI) alarms for immediate recession. ISM New orders Leading also indicates an immediate recession. What's next? You can see in recent weeks, the SEC has been questioning different comaniyas, cryptocurrency companies, and people. The regulation of the cryptocurrency market has begun, next is the takeover or liquidation of private banks in favor of the central bank. Then CBDC - FEDnow Starts in June-July. P.S if this prediction comes true, there will be a storm in cryptocurrency, and a drop below 16 is possible, I just keep it in mind. And it will look something like this Write your comments, send them to your friends, I really want to know your thoughts. Thank you MIlad Best regards EXCAVO
TVC:SPXShort
by EXCAVO
14
BITCOIN What Will Happen Next? Analysis! Hello,Traders! BITCOIN did not yet manage To break the key decisive level And I think that before the FED's first rate cut we will See BTC consolidating Between the two levels But after the breakout And 1W candle closing Above the level we will be Able to say that BTC will Go higher and sky is the limit Before that and before the FED acts, I am inclined to Expect consolidation Analysis! Like, comment and subscribe to help us grow! Check out other forecasts below too!
BITSTAMP:BTCUSDLong
by TopTradingSignals
11
Gold Threatens $2,000 Area Amid Banking JittersGold prices consolidated near recent highs on Friday, as investors' sentiment deteriorated on the back of renewed banking sector concerns after the stock of the German giant Deutsche Bank plummeted over 10%. At the time of writing, the spot price, XAU/USD, is trading at the $1,995 area an ounce, virtually unchanged on the day. The yellow metal attempted twice this week to break above the $2,000 psychological mark but failed, having posted a one-year high of $2,009. On Friday, European banking stocks suffered heavy losses, led by Deutsche Bank shares which plummeted more than 10% on a spike in credit default swaps. The risk-averse environment favored the dollar across the board, which has limited the XAU/USD upside. Gold prices peaked above $2,000 this week after the Federal Reserve delivered a "dovish hike." Even though the FOMC raised rates by 25 basis points as expected, the central bank dropped the hawkish forward guidance. Additionally, the dot plot suggested most FOMC members foresee just one more 25-bps increase this year. From a technical perspective, the XAU/USD picture remains bullish, according to indicators on the daily and weekly charts. Still, the weekly indicators have lost bullish momentum, given the XAU/USD failure to consolidate above $2,000. A decisive break of this level is needed to pave the way higher, with the next bullish target standing at March 2022 high of $2,070 and the $2,100 area. On the flip side, the next support level is seen at the former Fibonacci resistance at $1,970, followed by the $1,900 zone, where the 20-day SMA converges with another retracement level.
OANDA:XAUUSD
by Alex_Boltyan_FXAnalyst
#BOND crisis to fuel monetary expansion The Fed is damned by inflation if they print, damned by bank runs if they dont print. And with recession on the way, history shows we could plumb to new lows if the Fed only prints enough to backstop banks and pensions. Early 2000s and early 1930s were two such cases where the Fed aggressively lowered rates for well over 18 months but markets continued to trend lower anyway. But 2008 ushered in central bank quantitative easing, so with QE at the Fed's disposal, it is more likely the growth of M2 will accelerate which will keep inflation stubbornly high if not higher. A new factor that wasn't present before is that we have increasing M2 from China and Japan which has been a large driver of the market bounce we've seen in stocks and crypto since the start of the year. The 2-yr and 10-yr rates are heading lower in a hurry. CME Fed futures currently predicts one more 25 bps hike to a terminal rate of 500-525 then three consecutive drops of 25 bps. Higher inflation would become the standard as the Fed would be forced to accept a higher inflation target well above 2% which Ray Dalio had predicted in one of his published pieces.
FRED:WALCL
by BallaJi
$GBPUSD - Fed Rate To Rally Dollar Until 2Q *SMC**SMC = Smart Money Concept - See related Ideas for Tutorials on these concepts. I pulled two smart Money Fibs on the latest waves. The largest of the two has a Liquidity point that could be broken by the end of the quarter as "Smart Money" or the intuitional powers that be, may push it that way. After it breaks the Liquidity Level (Below 1.20120) or near the top of the Order Block, which is also my first safe entry, then I believe The Pound will catch up and turn Bullish. So My SL is 1.18693 and Take profit is 1.25092 making it a 2:1 R:R I'm taking the Smart Money principles and risking the Most that you should at 3% of your account. Typically, you don't want to risk more than 2%. Just an FYI for any new trader that maybe reading this idea. Happy Trading - BXW
Long
by BodiesXWix
GBP/USD Briefly Rises Above 1.2300 After BoE Hike The GBP/USD pair advanced for a second day in a row on Thursday, following the Bank of England's (BoE) decision to raise its main interest rate by 25 basis points to 4.25%. The BoE didn't rule out further hikes, which helped underpin the pound.However, the deterioration in the market sentiment during the New York session lifted the greenback and weighed on the pair, which retraced part of its intraday gains. At the time of writing, the Cable trades at the 1.2290 zone, up 0.21% from its opening price, having printed a three-week high of 1.2343 after the BoE announcement. The Federal Reserve also delivered a 25 bps rate increase on Wednesday. Powell's comments and the dot plot led investors to anticipate just one more 25 bps hike in 2023, which put the dollar on the defensive. The Bank of England, like the Federal Reserve and the European Central Bank (ECB), has prioritized the fight against inflation, citing the robustness and resilience of the U.K. banking system. Furthermore, the BoE's economic forecast anticipates a significant drop in inflation in Q2 2023, with a slight increase in economic activity over the same period. On Wednesday, the U.K.'s Office for National Statistics reported that the Consumer Price Index (CPI) had risen to 10.4% on a yearly basis in February, up from 10.1% in January and surpassing market expectations of 9.8%. The core CPI also increased from 5.8% to 6.2% over the same period, exceeding consensus estimates. From a technical standpoint, the GBP/USD retains a bullish bias on the daily chart, with indicators in positive territory and the pair above its main moving averages. On the upside, short-term resistances are seen at the 1.2300 psychological level, followed by March 23 high at 1.2343 and then the 1.2400 zone. On the other hand, support levels could be found at 1.2200, the weekly lows at around 1.2170 and the 1.2100 mark.
by Alex_Boltyan_FXAnalyst
USD/CHF - Swiss franc climbs higher, SNB meeting eyedThe Swiss franc continues to rally and is trading in North America at 0.9139, down 0.37%. USD/CHF has fallen some 200 points in just one week. SNB goes for oversize hike The Swiss National Bank raised rates by 50 basis points today, bringing the cash rate to 1.50%. It was a toss-up whether the SNB would raise rates by 25 or 50 bp, and in the end, policy makers opted for the larger increase. There were strong reasons to support either move. Swiss inflation jumped to 3.4% in February, its highest level since 1993. Although these levels are very low compared to other major economies, inflation is above the target of 0%-2% and this supported a 50-bp increase. At the same time, the market turmoil triggered by the bank crisis provided the SNB with an out, if it so wished, to opt for a smaller 25-bp hike. SNB head Jordan said after the rate decision that the UBS takeover of Credit Suisse had averted a financial disaster, not just for Switzerland but for the global economy. Jordan warned that it was critical that the merger take place in a smooth manner in order to maintain financial stability. The SNB has been busy lately, providing $53 billion for the takeover and signing on to a coordinated move by six central banks to boost liquidity. The Federal Reserve raised rates by 25 bp on Wednesday as expected, but the move was a "dovish hike". The Fed changed the language in the rate statement, stating that tighter policy "may be appropriate", compared to "will be appropriate" in the previous statement. The dot plot chart indicated a forecast of a terminal rate of 5.1% for the end of 2023, unchanged from December. The Fed's battle against inflation, which is showing results, hit a snag due to the recent bank crisis which sent the markets into turmoil. The Fed made reference to the crisis in the rate statement, stating that, "The US banking system is sound and resilient", but added that it was uncertain how the fallout of the crisis would impact the economy and inflation. ECB President Lagarde said this week that the banking debacle could help curb eurozone inflation, and the same argument, I suppose, can be said about inflation in the US. The recent turmoil in the markets means that the Fed's rate path is unclear. With inflation still high, there is a need for additional tightening, but at the same time, tighter policy could worsen the stress on the banking system. The markets are expecting the current tightening cycle to end soon, with a pause and rate cuts to follow later in the year. . USD/CHF is putting pressure on support at 0.9110. The next support level is 0.8935 0.9226 and 0.9304 are the next resistance lines
by OANDA
7
SPX (1D) Midterm setup - BEAR Market chance is raisingHello traders, investors and other speculators :) Yesterday before Jerome Powell spoke, markets we underestimating chance of 25bos hike. Now it seems like we can expect another 25bps hike in May. With current conditions there are increasing odds for bear market coming as SP is falling closer to sub 3900 support levels. Also notice rejection from exponential moving averages (EMA 55 and EMA 200 at 1D chart). Those are not good signs. More red flags come from indicators RSI (rejection below resistance) and MACD which is down ticking again. With expectations of S&P EPS falling ... P/E Will be considered overvalued and risky. While you can earn up to 4,5-5% p.a. by just holding government bonds. So why the hell should S&P 500 go up from this point? If 3900 bps support break, than we are heading MUCH LOWER. Brace yourself.
AMEX:SPYShort
by Longevity_Contrarian