Yesterday, the market experienced a correction caused by the Federal Reserve meeting and other factors. We did not take into account that during Powell’s press conference before Congress, former Federal Reserve Chair and current Treasury Secretary Yellen also spoke (and in our opinion, is a more predictable and consistent leader). Their statements on some points differed. While Powell reassured that the banking system was safe and there would be initiatives to insure bank deposits, Yellen indicated that it was not the main problem at the moment. Therefore, the dip was deeper than expected.
Summary on the Federal Reserve
There was no easing. The interest rate was raised and the possibility of raising it again was left open. The rate will not be lowered at least until the end of the year. Fighting inflation is currently a top priority with such a strong labor market. Quantitative tightening (selling assets from the Fed’s balance sheet) remains unchanged. For now, only the labor market can stop the Fed, and today at 3:30pm, another batch of US data was released, which clearly shows that the labor market is doing well.
Do not be deceived by the fall of the dollar index; this is due to other central banks raising rates. After a series of increases, the DXY will rise.
News
There are no upcoming important news events, except for unplanned comments from Fed members, which could happen today.
- Silicon Valley Bank is not in a rush to buy, the deal is stalling.
- The SEC has complaints against Tron and BTT.
Base Scenario
The situation has changed and the market’s hopes for a soft Fed were not met. Our basic trading strategy is to short. Many assets are currently at good prices, and we expect a deep correction.
The views expressed in this article are solely those of the author and should not be construed as official statements or representing the views of the company. The author is solely responsible for any errors or omissions in the information provided. The information contained in this article is provided for informational purposes only and is not intended to be investment or professional advice.
