Amid concerns about inflation increases and a market crash, small businesses and restaurants will benefit from a $55 billion aid support.
Were the Federal Reserve policymakers wrong about their inflation forecasts?
Well, this is the most frequent question in recent weeks. The stock market suffered a setback this morning as investors worried about expected price increases in goods and services.
This Tuesday, the Bureau of Labor Statistics is set to release its consumer index reports. Traders are concerned about the 8.4% year-over-year increase, which would be the fastest in the consumer index since 1982.
According to Jim Blanco‘s market analysis, the bond market will suffer catastrophic results. He added that the Federal Reserve policymakers must take their share of the blame. Last year, the Federal Reserve chairman said that by 2022, the inflation rate would slow down a bit.
But now we are experiencing the worst inflation rate since 1982, and eventually, the FED decision will come back and hurt all financial assets.
By Monday evening, the S&P declined by 1.25%, losing 56.11 points to stand at 4,432.17 points. The tech-heavy index declined by 1.82%, losing 248 points to settle at 13,462.11 points. As for the Dow index, it fell by 0.66%, adding to last week’s losses.
Gold has increased by 0.32% to be worth approximately $1950.80 per ounce. Crude oil has declined and is now up by $94 per barrel.
The treasury yield and the global bond market also suffered from a noticeable increase this morning. Germany, France, and the U.K. are urging countries to send military support to Ukraine as fast as possible.
The 10-year U.S Treasury yield has risen to 2.75% for the first time since the pandemic’s early days. The March interest hike drove mortgage rates into higher rates, and we see that clearly in a continuing increase in both 3 year and 10-year U.S yields.
Since 2019, small businesses and restaurants have suffered significantly. Due to that fact, the house of legislation has passed a new bill.
The House has agreed to support small businesses, restaurants, gyms, and all other businesses with $55 billion. Amid worries about a market crash and increases in unemployment, the house had decided to support small businesses financially during this period since almost 40% of these businesses had closed during the pandemic.
The private sector and small businesses remain a strong pillar of the U.S economy. The White House isn’t ready yet to leave it all alone to fight inflation.
According to experts, the Fed and the hose have the only solution for a fast and healthy market recovery. The solution will be to make an ultra-interest hike at a fast rate. However, that might become an economic disaster afterward since the market is already facing inside and outside crises. On top of that, the Federal Reserve might consider some means of meeting a 75% interest hike, which may result in a catastrophic interest rate on the bond and housing market.
Although these remain only forecasts, all must be considered due to the long-term war scenario that may lead to a global recession.
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