What's moving the markets? The Fed, gold, and earnings season! What will the week bring?
The threat of further 100% tariffs on China shook markets in the first half of October. After a short-lived but dynamic sell-off, buyers took control and drove major US indices to new all-time highs in just two weeks.
What's moving the markets right now?
Investor optimism doesn't come from a vacuum – consumer recovery is progressing, and recent retail sales data surprised on the upside. However, the key publication of the past week was the inflation report. The downward revision of services inflation (both with and without rental costs) should bring real relief to the hawkish wing. Fed, which was viewed positively by the market. The key question, however, remains whether this decline is sufficient to warrant further interest rate cuts, given the likely absence of a CPI release next month.
Wednesday's Fed meeting will almost certainly bring another interest rate cut. The market is also pricing in a December cut with 100% certainty, and the Fed's next move is forecast for March of next year. Investors are also expecting Jerome Powell to announce changes to the balance sheet reduction schedule – the base case assumes the end of QT in December, but some suggest it could happen as early as November. This could signal a further increase in credit used to purchase stocks, as has already happened in the past.
- What do the latest macroeconomic data tell us?
- How much will Fed interest rates fall?
- Who will be the new head of the Fed?
About the host
Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.
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