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Everything Collapses: Fed Looming Over Interest Rate Shock Wednesday?

  • Bitcoin BTC / USD – Kurs: $ 24,223.00000 (Bitfinex)

These are not pleasant days and weeks in the financial markets. Central banks have lost control of inflation by acting too hesitantly and must now act even more dramatically in order not to completely lose credibility. Investors are selling their shares in a panic. Everything that was particularly dependent on the wave of cheap money and low interest rates is under selling pressure: tech stocks, growth stocks, cryptocurrencies.

Bitcoin chart

Bitcoin and other cryptocurrencies also suffered on Monday after news that DeFi company Celsius Networks stopped its payments to customers.

The dramatic data came out of the US on Friday. the inflation rate it went from 8.3% in April to 8.6% in May. This was the highest level since December 1981. But even in Germany and Europe, inflation is now practically out of control. Although the US Federal Reserve reacted to inflation before the European Central Bank (ECB), for example, all the major central banks have failed to fight high inflation and must now act even more dramatically.

Requests were made on Wall Street on Friday that the US Federal Reserve should Interest rate decision Wednesday (20:00) Raise the key interest rate by a full percentage point to finally take a stand against high inflation. This, too, would be just a sign, after all, the benchmark interest rate would still be a whopping six percentage points below the inflation rate, but the Fed would at least be on a path that would seem reasonably credible that interest and rates of inflation will rise in the coming quarters could be reconciled.

However, the markets do not believe in a one percentage point rate hike. According to the CME FedWatch Tool, a 0.5 percentage point rate hike has a 77% probability and a 0.75 percentage point rate hike with a 23% probability. So, if you believe the market, a full percentage point rate hike is out of the question.

Another argument against a dramatic rise in interest rates is the fact that the economy is still doing well, but there are growing signs of a slowdown. According to preliminary information, the US consumer sentiment determined by the University of Michigan fell to an all-time low in June, also reported on Friday. How fortunate that consumer confidence based on surveys does not usually correlate with actual consumer spending by Americans.

In the meantime, the central bank has also resumed the fight against inflation in Europe. As expected, the ECB announced the first rate hike since 2011 for July on Thursday. In September, the reference rate could even have risen by more than 0.25 percentage points. However, in the euro area, a dramatic gap remains between interest rates and the rate of inflation and it is not yet foreseeable how this gap will close again.

Given the macroeconomic situation, which in reality can only be described as catastrophic, company-specific news should also play a minor role in the new week. quarterly figures become the two software companies Oracle And Adobe to publish.

Important dates of the new week

Please note that the following overview lists only a selection of the most important dates. You can find a complete overview of the dates in Driving diary. All statements without guarantee.

Monday 13 June 2022

  • US quarterly data (out of hours): Oracle
  • Other corporate events in Germany and Europe: Delivery Hero (analyst event), HelloFresh (analyst event), Bike24 (roadshow), GSW Immobilien (general meeting), ING Groep (investor event)
  • Other US corporate events: General Motors (General Assembly), New York Times (investor event)
  • 12:00: OECD leading indicator

Tuesday 14 June 2022

  • Corporate events: Fraport (traffic data in May), Home24 (general meeting), Hawesko (general meeting)
  • 08:00 am Germany May inflation rate (final)
  • 11:00: ZEW Indicator of Economic Sentiment June
  • 2:30 pm: Producer prices in the US in May

Wednesday 15 June 2022

  • Corporate events: Südzucker (presentation of the new corporate strategy), H&M (second quarter sales figures), Cewe Foundation (General meeting), Global Fashion Group (General meeting), OVB Holding (General meeting), Jenoptik (General meeting)
  • 04:00 am: Industrial Manufacturing and Retail Sales in China May
  • 11:00: Eurozone industrial production in April
  • 2:30 pm: May retail sales in the US
  • 2:30 pm: Empire State Index June
  • 2:30 pm: U.S. import and export prices for May
  • 20:00: Fed decision on interest rates
  • 8:30 pm: Press conference begins with Fed President Jerome Powell

Thursday 16 June 2022

  • Public holiday (Corpus Christi) in some federal states. Stock exchanges in Germany are regularly open. Swiss stock exchanges closed.
  • US quarterly data (out of hours): Adobe
  • Other corporate events: Delivery Hero (General Assembly), HHLA (General Assembly), Befesa (General Assembly)
  • 8:00 am: New vehicle registrations in the Eurozone in May
  • 9:30 am: Rate decision by the Swiss National Bank (SNB)
  • 13:00: Bank of England (BoE) interest rate decision.
  • 2:30 pm: Philadelphia Fed Index June
  • 2:30 pm: Initial weekly jobless claims
  • 2:30 pm: May housing and permits begin in the United States

Friday 17th June 2022

  • Company Dates: Tesco (Quarterly Updated)
  • night / morning: Bank of Japan interest rate decision
  • 11:00 am: Eurozone inflation rate in May (final)
  • 3.15pm: US industrial production in May

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