• News
    • Stocks
    • Banks and Finance
    • Companies
    • Crypto
    • Forex
  • Videos
  • Articles
    • Forex CRM
    • Crypto Payments
    • Trading
    • Crypto Exchange Business
    • Forex Business
    • Fintech
    • Liquidity
    • FinTech Awards
  • Liquidity Providers List
  • Crypto Payment Providers

Dark Theme

Stocks Stumble as Fed Speeds Up Stimulus Phase Out

Dec 21, 2021

Stocks Stumble as Fed Speeds Up Stimulus Phase Out

"The true measure of intellect is the capacity to hold two diametrically opposed thoughts in mind at the same time and still operate," F. Scott Fitzgerald stated. According to that standard, the collective intelligence that drives the stock and bond markets is entirely amazing.

According to one idea, stocks sank this week on fears that major central banks might raise interest rates to rein in inflation. Simultaneously, bond rates have been declining, despite the same concerns about rate hikes and despite the greatest inflation data in over four decades.

What is unsurprising is that the major Western central banks convened and turned, in varying degrees, away from the extraordinarily accommodating policies they had maintained since March 2020, through the worst of the financial and economic consequences of the Covid-19 pandemic's outbreak.

As predicted, the Federal Reserve said that it would accelerate the winding down of its securities purchases, paving the path for higher interest rates as early as March. Meanwhile, the Bank of England stunned investors by raising interest rates, despite the deterioration of the Omicron variety in the United Kingdom. Additionally, the European Central Bank stated that it will gradually reduce its bond purchases next year, with a rate hike conceivable as late as 2023.

After first responding with relative calm to the Fed's decision, equities fell significantly on Thursday and proceeded to fall through the rest of the week. As explained here a week ago, the S&P 500 index was dominated by the five most prominent technology companies, and when these mega-caps eventually succumbed, the main indexes succumbed as well.

Their once impermeable condition disguised a number of other decreases. According to J.P. Morgan strategist Marko Kolanovic, on average, US equities are down 28% from their highs this year, while the wider market (as measured by the Russell 3000) is up approximately 22%: "Such a gap is unusual in the recent four weeks, indicating a historically exceptional overshoot in selling smaller, more volatile, often value and cyclical stocks."

Stocks may continue to be under pressure as the year ends, owing to institutional portfolio rebalancing, according to Maxwell Grinacoff, BNP Paribas' equity derivatives strategist. Given the S&P's outperformance compared to bonds, he forecasts that between $1 trillion and $1.4 trillion will be moved from stocks to fixed income this quarter, with around half occurring this month.

Perhaps this helps to explain part of the continued demand for long-term bonds, despite the potential of raising the federal fund's target from its present range of 0%-0.25% levels. According to the CME's FedWatch website, the futures market now offers even-money chances on a March liftoff. Additionally, the markets have completely priced in three quarter-point raises by the end of 2022, which aligns with the Fed's revised expectations following last week's policy meeting.

What's perplexing is the market's apparent belief that inflation will decline as the Fed forecasts, with the personal consumption expenditure deflator rising to 2.6 percent in 2022 from a projected 5.3 percent in 2021 and 2.1 percent in 2024. According to the market for Treasury inflation-protected securities, predicted inflation over the next five years (as measured by the consumer price index) has decreased to 2.70 percent from 3.17 percent a month ago.

Thus, inflation is projected to be contained as the Fed continues to pursue a relatively easy policy, as seen by the real fed-funds rate being below zero in a virtually full-employment economy. That requires a very exceptional intelligence (the collective intelligence).

Subscribe Our Newsletter

Expert Opinion: Nvidia’s Investor Day Is About to Begin. Here’s What It Means for the Stock.
Expert Opinion: Nvidia’s Investor Day Is About to Begin. Here’s What It Means for the Stock.

He'll also be looking for information on next-generation gaming items and fresh additions to the company's automotive roadmap. He is optimistic that the company would provide more precise expectations about its software prospects.

Stocks
Crypto Stocks are Taking Off: Here’s How to Catch the Wave.

Milena

Crypto Stocks are Taking Off: Here’s How to Catch the Wave.

Despite an incredible surge in crypto equities such as Coinbase, these businesses face several concerns.Here is why.

Crypto
Tatma

Best High-Yield Savings Accounts For March 2023
If you have ever dealt with a bank - and I find it hard to think you haven't - you have probably considered opening a savings account to earn passive income over time.

discover
What is a Liquidity Provider?

Liquidity Provider

What is a Liquidity Provider?

Let's find out what a liquidity provider is and what to consider when choosing a reliable liquidity provider.

Liquidity

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries b2broker

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Tamta

    What Is Crypto Arbitrage Trading?

    https://liquidity-provider.com/app/uploads/2023/06/cover-1-800x540.jpg

    Tamta

    Guide to Craiyon: How To Use a New DALL-E Mini

    https://liquidity-provider.com/app/uploads/2023/06/cover-5-800x540.jpg

    Tamta

    Credit Cards vs. Debit Cards

    https://liquidity-provider.com/app/uploads/2023/06/cover-800x540.jpg

    Tamta

    Investing In Private Equity: What Should You Know?

    https://liquidity-provider.com/app/uploads/2023/05/cover-7-800x540.jpg

    Tamta

    What is Data Analytics? Techniques, Tools, Methodology, and More

    https://liquidity-provider.com/app/uploads/2023/05/cover-6-800x540.jpg

    Tamta

    Bitcoin Halving is Coming: What Does it Mean for the Crypto Market?

    https://liquidity-provider.com/app/uploads/2023/05/cover-4-800x540.jpg

    Tamta

    Crypto Token Supply From A to Z

    https://liquidity-provider.com/app/uploads/2023/05/cover-3-800x540.jpg

    Tamta

    What Is ChatGPT, And How Can You Use It?

    https://liquidity-provider.com/app/uploads/2023/05/cover-2-800x540.jpg

    Anton

    Trading on Autopilot: The Rise of Crypto Trading Bots

    https://liquidity-provider.com/app/uploads/2023/05/cover-1-800x540.jpg

    Tamta

    Crypto Investing vs. Crypto Trading: What’s The Difference?

    https://liquidity-provider.com/app/uploads/2023/04/cover-5-800x540.jpg

    Tamta

    Understanding Indexed Universal Life Insurance (IUL)

    https://liquidity-provider.com/app/uploads/2023/04/cover-4-800x540.jpg

    Tamta

    Best Investment Strategies For Beginners

    https://liquidity-provider.com/app/uploads/2023/04/image1-800x540.jpg

    Tamta

    Understanding Perpetual Futures: How Do They Work?

    https://liquidity-provider.com/app/uploads/2023/04/cover-3-800x540.jpg

    Tamta

    What Is A Bitcoin Stock-To-Flow Model? Beginner’s Guide

    https://liquidity-provider.com/app/uploads/2023/04/cover-2-800x540.jpg

    Tamta

    Best Decentralized Crypto Exchanges In 2023

    https://liquidity-provider.com/app/uploads/2023/04/cover-1-800x540.jpg

    Tatma

    Best High-Yield Savings Accounts For March 2023

    https://liquidity-provider.com/app/uploads/2023/04/cover-800x540.jpg

    Tamta

    Crypto Trading For Beginners

    https://liquidity-provider.com/app/uploads/2023/03/cover-8-800x540.jpg

    Tamta

    How To Make Money With Cryptocurrency

    https://liquidity-provider.com/app/uploads/2023/03/cover-7-800x540.jpg

    Tamta

    What Is A Candlestick Chart?

    https://liquidity-provider.com/app/uploads/2023/03/cover-6-800x540.jpg

    Constantine

    White Label Forex Software — Ultimate Guide on How to Choose The Best Industry Solution

    https://liquidity-provider.com/app/uploads/2023/03/cover-3-300x203.jpg

    Tamta

    Forex Trading: A Beginner’s Guide

    https://liquidity-provider.com/app/uploads/2023/03/cover-2-300x203.jpg

    Tamta

    How to Create a Cryptocurrency

    https://liquidity-provider.com/app/uploads/2023/03/cover-1-1-800x540.jpg

    Tamta

    Top Ten Richest People In The World, 2023

    https://liquidity-provider.com/app/uploads/2023/03/cover-4-1-300x203.jpg

    Constantine

    What’s at Stake? Here’s How to Avoid Scam Tokens

    https://liquidity-provider.com/app/uploads/2023/03/cover-5-300x203.jpg
    • News
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
    • Articles
      • Forex CRM
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
    [email protected]

    © 2023 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy