FED raises but is it fast enough?

As expected the FED raised interest rates (by 0.5%) and equity markets seemed to be placated by this as there were some observers calling for a bigger jump in fact the concern was that raises may be 75bps in June however FED’s Powell confirmed the thinking was that 50bps is sufficient but that the FED will also reduce QE by reducing its balance sheet.

Its worthy of note that the last time the FED raised rates this fast (2000-2001) they had a very detrimental, but inadvertent effect on tech stocks and presently that looks like history is repeating.

US 10year went in to the FOMC / FED meeting at a yield of 2.9% and has subsequently rallied to the present 3.14% as the market whilst “cheered” that they didn’t raise more are concerned that the FED may have to. Tuesdays inflation rate data will keep the market from being complacent and is the most important data out this week.

The US$ benefitted ultimately from the rate rise and even though the British raised rates (by 25 bps) GBP was the worst performer against the USD as politics continue to show the ruling Conservatives as weak and the Bank of England said they were concerned about growth going forward; which given the jump in the cost of living, is not that surprising but the fact they verbalised it has spooked the holders of GBP.

Commodities had a very mixed week with metals, in general having a poor week as covid and thereby China lockdowns and economic slowdown continue to feature along with rising rates and the potential knock on effect for world growth.

But energy made new highs in natural gas, and petroleum also made strong gains as the market fretted about the draw on stocks and attempts to stockpile ahead of the Northern Hemisphere summer. Oil further benefitted as the EU drew up plans to stop Russian imports. The news that the Saudi King has been admitted to hospital will also add some concerns.






May 10


BRC retail sales



May 11


Inflation Rate





Oil Stocks





Gasoline Stocks



May 12







Initial Jobless Claims



May 13


Consumer Sentiment



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