Markets Bracing for FOMC Decision
15 March 2022
Volatility continues to dominate the markets as investors digest news from Ukraine, along with soaring inflation, prompting several central banks to tighten monetary policy.
Earlier today, Chinese industrial production for February improved notably to 7.5% year on year, up from 4.3% previously. At the same time, domestic retail sales rocketed to 6.7% yearly, against 1.7% previously. The fixed-asset investment also improved markedly in February.
Yesterday was a bearish day for both US stocks and bonds, sending US yields to new cycle highs as investors brace for this week's FOMC decision. The Fed is widely expected to hike rates. Still, the following statement will be of crucial importance, whether the central bank will acknowledge a need for faster rate increases due to soaring inflation.
While EU indices rose notably yesterday, fueled by optimism coming from a possible deal between Ukraine and Russia, US indices fell notably as investors seem to be more scared of inflation than the war.
The recent uptrends in commodities could be over for now, as oil has returned below 100 USD and gold dropped to 1,930 USD. In addition, traders are hoping for a diplomatic solution between Ukraine and Russia, thus, taking profits from their long positions in commodities.
In the FX, the USD has retreated slightly, pushing the EURUSD pair toward 1.10, but the overall trend remains bullish for the greenback.