Daily Alert – Wednesday 14th September 2022: The Fed’s going to need a bigger boot

Mark NugentDaily Alert, Sept 2022

Daily Alert – Wednesday 14th September 2022: The Fed’s going to need a bigger boot

Good morning.

Yesterday, inflation in the US came in higher than expected: 6.3 percent vs 6.1 percent, year-on-year. This, coupled with strong employment figures and robust consumer spending, signalled to the market, and doubtless the Fed, that a bigger boot needs to be put on inflation. Forecasts for next week’s rate hike have roughly two-thirds of participants predicting a 75 basis-point hike and one-third predicting a full 100 basis-point rise.

Needless to say, the USD rose significantly, and equities tanked.

My WTI long trade suffered from some volatility and is currently underwater. I will manage it closely.

This morning in the UK we saw inflation at 9.9 percent vs an expectation of 10.2 percent. Less than forecast, which is good, but still horrible.

Equities are now back to where they were last week when I missed the boat on the rally. Now, I get another chance. The GBPUSD rally has been reversed and the price is now back at support. Another rally would be good before going short, but I’d settle for a breakout down through support on the daily candle.

Later today we have European Commission President Ursula von der Leyen outlining her proposals to curtail the energy crisis and protect the economy. The Commission seems to have the bit between its teeth on this one, so we’ll see what happens. I suspect the energy companies are going to get hammered.

I’ll be back tomorrow.

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