On July 27, the Federal Reserve will hold its final FOMC meeting before it suspends for two months. All eyes are now on Jerome Powell, FED chair. Will he follow the market consensus of 75 base points (bp), or will he pursue a more aggressive 100bp to combat inflation?
The FED will make its interest rate decision at 2PM ET Wednesday. The GDP data will follow at 8.30 am Thursday.
A ZeroHedge preview of FOMC meeting and economists surveyed Reuters shows that there is only a 10% chance for a 100bp movement. Inflation increases will slow to 50bp and 25bp respectively in September and November, according to economists surveyed.
Reversing a recession
Just days after the White House tried to publicize a new method for determining when an economy is in recession, the FED meeting will take place. The US GDP data is due Thursday. This could cause confusion in the markets if it shows a two-quarters drop in GDP.
A recession is defined as two-quarters negative GDP growth. The current White House administration does not use this metric. To create a holistic view of the economy’s health, metrics from the labor market, consumer and corporate spending, industrial production, incomes, and other data will be added to the data.
Guy, a Coin Bureau market analyst and commentator, expects “some market volatility” Wednesday before the FED meeting.
Interest rate decision today. This is the last chance for the Fed’s to lower inflation before their two-month holiday.
You can expect some market volatility!
— Coin Bureau (guy.eth) (@coinbureau) July 27, 2022
Yahoo! interviewed Michael J. Wilson, Morgan Stanley’s chief executive officer. Finance,
“Equity markets” may be trying to get ahead the Fed’s eventual pause, which is always a bullish sign. This time, however, the pause will likely come too late.
Part of the reason for recent crypto price rises could be the desire to “get ahead”. Bitcoin reached $24k on July 20, but has been declining since then, with the FOMC meeting Wednesday. Bitcoin stands at $21.3K as of the writing. This is an increase of 3% each day.
Oil prices rose in the wider market ahead of the meeting following a report that showed a decrease in US crude oil inventories. The S&P rose by 5% in July, suggesting that sentiment is shifting towards a bullish outlook.
CNBC reported that Gold prices could experience volatility if the Fed raises 75 bps in July. Standard Charter analyst said that while the majority of the near-term risk has been priced into, the longer-term trend remains to the downside.
On July 27, companies with combined valuations over $4 trillion, including Meta, Boeing and Spotify, Shopify, Shopify, Upwork, will report their second quarter earnings.
Companies are reporting earnings worth over $4 Trillion today. There will be a FOMC/Fed meeting and rate hike tomorrow. Q2 GDP numbers will be released in two days (which will confirm that there is a recession).
The markets could be volatile in the short-term. Be prepared.
Josh (@CryptoWorldJosh), July 26, 2022
There is mixed sentiment on the global markets. It remains to be seen how the crypto industry will react. Since the beginning of the year, the price of Bitcoin has been at its lowest correlation to the Nasdaq. Michael Saylor, despite market volatility, candidly reminded the public that “Bitcoin doesn’t miss earnings.”
#Bitcoin does not miss earnings.
— Michael Saylor
July 26, 2022 (@saylor).
Charlie Bilello, CEO at Compound Capital believes that a 75 bp is already priced in the bond market based on data regarding treasury yield conversions. It is difficult to determine whether crypto will experience the same as a global recession, or even soaring inflation.
In the days that followed the FOMC meeting this year, Bitcoin fell. The possibility of breaking this trend is increasing as the correlation with stock markets declines. We could see inflation expectations for next two months priced into Wednesday’s FOMC meeting. There won’t be another FOMC meeting before September. The FED will not intervene in the price discovery of the markets for the summer.
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