Daily Alert – Wednesday 2nd November 2022: Hoping for a hawkish Fed

Mark NugentDaily Alert, Nov 2022

Daily Alert – Wednesday 2nd November 2022: Hoping for a hawkish Fed

Good morning.

Yesterday was risk-off as the markets await tonight’s Fed rate-setting announcement.

There is a broad expectation that we will see a fourth consecutive 75 basis-point hike. Anything less than this should boost equities and suppress the USD and bond yields.

The markets will be paying close attention to any indication from Fed Chair Powell that subsequent hikes will be less than 75 basis-points and we as such are getting close to the peak. Any hints along these lines will, again, boost equities and suppress the USD and bond yields.

So, in terms of supporting my fundamental biases on equities and the USD, I would favour a hawkish Fed with no hint that the peak is in sight and lots of “we-will-do-what-we-can”-type talk.

We will find out at 6pm UK-time tonight.

I’ll be back tomorrow.

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