The U.S. Federal Reserve president’s comments that the key interest rates will remain higher for a long time sent Wall Street tumbling from the news.
All hopes are dashed, and the key interest rates will keep rising, according to the U.S. Federal Reserve’s comments during its testimony to Congress.
The recession risks in the U.S. are high, especially due to the mixed economic reports released in the past few weeks.
Investors’ sentiments for a 50% key interest hike skyrocketed, and marketers fear that the market can’t bear anymore higher hikes.
The FED officials and monetary policymakers strongly believe that keeping interest rates high for a long time is the best and only solution to avoid a recession. Their decisions were made based on the conflicting corporate earnings cycle over the past few months. Arguably, Wall Street hasn’t recovered yet from COVID’s declines.
On top of that, the war on the western front of Europe won’t end until the losses are too great to bear for all economic and political powerhouses.
Here is a recap of what has been going on in the past few weeks. The inflation report came in hotter than expected, followed by better-than-expected payroll data. The labor market in the U.S. is adding jobs at a faster rate than all other markets. Corporate earnings have improved relatively compared to the 2022 third quarter.
This strong data has supported Jerome Powlle in keeping with its previous plan which is; to increase the key interest rate for a long time.
A half-basis point interest hike is once again on the table and is more likely to be implemented by the next Federal Reserve meeting.
Moving to Wall Street’s main indexes, Wall Street falls on Wednesday’s opening trading hours. The S&P 500 main index was down by 0.35 percent as of 13:40 p.m. Et. The Nasdaq recapped some of its losses, and now it’s currently down 0.1%. The Dow Jones average industry also posted the highest decline, estimated at 0.7%.
The U.S. dollar index rose by 0.09 and the Treasury yield jumped as fears of a market recession grew. The U.S. 10-year Treasury yield indexes were up by 0.46 percent at 3,996; the fixed 30-year index rose by 0.11 percent.
However, despite the higher mortgage rates, the report indicates that U.S. home loans have increased sharply in the past month.
Meanwhile, in the energy market, oil prices are considerably higher for the global market at a time when oil consumption is increasing and oil production remains limited and short.
Sentore from the U.S. Congress might take the fight outside the U.S. and open fire on the OPEC members.
A group of U.S. senators believes that leaving the OPEC organization that controls oil prices will only bring uncertainty and market turmoil. The same group is seeking to proceed with new legislation that enables the U.S. and certain organizations to control oil pricing. U.S. officials say that oil cartel behavior must stop and their new legislation will bring fair competition to the market.
A move like that will only increase the tension between the U.S. and OPEC, especially during this crucial time.