From the Federal Reserve’s decision to Putin’s steps

From the Federal Reserve’s decision to Putin’s steps
From the Federal Reserve’s decision to Putin’s steps

© Reuters

| By Jeffrey Smith, |

The Federal Reserve is expected to raise interest rates again in the US – but by how much?

Vladimir Putin brandishes the nuclear sword, as he recruits 300,000 reservists for his war in Ukraine, and further increases in the dollar and gas prices in Europe.

The US existing home sales report is expected to be published, and the real estate giant Lennar will publish its quarterly financial reports.

In the UK, Prime Minister Liz Truss is preparing another aid package for the energy crisis, and the US government will publish its weekly oil inventory report, amid rising concerns about global oil demand.

Here’s what you’ll need to know about the financial markets on Wednesday, September 21.

1. The day of the Fed’s decision

The Federal Reserve is expected to raise rates again in the US, with the market divided on whether to expect a 75 basis point interest rate hike, as happened last time, or a full percentage point hike. Another positive surprise, which came in the US in August, has some analysts leaning towards The second option, even though the consensus forecast is still – barely – for an increase of 75 basis points.

More important, some would argue, will be the so-called ‘Dot-Plot’, which maps the course of interest rates expected by policy makers for the next two years. This figure should signal the level to which the central banks think interest rates should rise, and the length of time they will have to remain at these levels, until victory over inflation can be declared. The price of short-term interest rate futures implies a peak during the next year of between 4.5%-4.25%, about 2% higher than their current level.

The decision of the Federal Reserve is expected to be published as usual later today, when Fed Chairman Jerome Powell will hold a press conference half an hour later.

2. Putin raises the bar of tensions with partial reserve mobilization

Russian President Vladimir Putin surprised the West on Wednesday when he announced the partial mobilization of Russia’s 2 million-strong reserve army and confirmed his intention to annex those parts of Ukraine currently under Russian occupation.

Putin said that the recruitment of the reserves will be limited to those who have already served in the army, and who have relevant experience and training. Russian Defense Minister Sergei Shoigu said in a televised speech afterward that the draft would affect only 300,000 civilians.

The move marks a significant change of direction for the Kremlin, and can be seen as a response to recent defeats on the battlefield in Ukraine, and signs that leverage on European energy markets may be on the wane, currently falling.

3. The stock markets in the US are expected to open with price increases; the house sales report, the workforce cuts of the clothing giant Gap in Moked

The stock markets in the US are expected to open with modest price increases, despite the drama in Russia, but essentially they are on standby for the Fed meeting later today.

As of noon Thursday, it was up 70 points, or 0.2%, while climbed 0.2%, remaining unchanged. The three benchmark stock market indices lost about 1% each on Tuesday, following an outburst of concerns ahead of the Fed’s decision.

Stocks that are expected to be in focus later today include the construction giant’s stock Lennar (NYSE: ), which will publish its quarterly performance on the same day it is expected to be published in the US in August.

Also the food giant General Mills (NYSE: ) is expected to report. Also in the spotlight is the clothing giant Gap (NYSE:), which is expected to cut 500 jobs in the company, according to a report by the Wall Street Journal.

4. The British government’s energy bailout and the nationalization of Unifer

The new British Prime Minister, Liz Truss, has announced an aid package for businesses designed to help them pay their energy bills this winter. The package will set a price ceiling for electricity and gas prices, which will be about half of their current price in the spot markets, for six months. A more selective aid program will be implemented later.

The measure, estimated to cost 40 billion pounds ($45.5 billion), is the second major fiscal package announced by the Truss to tackle the energy crisis. It fell in response to a new 37-year low amid concerns from an earlier report, which pointed A sharp increase in public loans due to the increase in the cost of interest.

Meanwhile, the energy crisis in Europe claimed another victim, and that is Germany, where the federal government agreed on the nationalization of the country’s largest gas supplier, Unifer (ETR:), whose financial condition was ruined as a result of the stoppage of Russian supplies.

Elsewhere, French Finance Minister Bruno Le Maire asked the European Union to provide a plan to ease government aid laws to help businesses get through the winter.

5. The price of oil soared following Putin’s words; Anticipating the EIA’s weekly US oil inventories report

The price of crude oil rose sharply, as the market moved to weigh a higher geopolitical risk premium, following a speech by Russian President Vladimir Putin.

As of midday Wednesday, the price of oil futures rose 2.4% to $85.95 a barrel, while crude futures climbed 2.3% to $92.74 a barrel.

The key figure the market is now awaiting is for last week, which is expected to show an increase of 2.16 million barrels in crude oil inventories. , published on Tuesday, missed forecasts and included an increase of just over 1 million barrels.

The article is Hebrew

Tags: Federal Reserves decision Putins steps

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