Fed hikes rate

Reserve Bank of India (RBI) governor Shaktikanta Das announced a 40-basis-point (bp) hike in the key lending rate and raised the cash reserve ratio (CRR) by 50 bps in an unscheduled announcement on May 4. This is the first such unscheduled statement from the RBI governor since the start of the pandemic in 2020. The announcement surprised the markets, pushing up bond yields and putting pressure on the equity indices. In an interview with Moneycontrol, Madan Sabnavis, chief economist, Bank of Baroda, shares his views on the RBI rate hike. Edited excerpts: Was the 40-bp rate hike a surprise? Yes, it was a surprise for two reasons. There was no official data point which had come since the last policy except the CPI (Consumer Price Index) inflation number which anyway was expected to be close to 7 percent. Second, the quantum of 40 bps appeared to be high considering that the market was expecting 25 bps at a time. Close Also Reads | Another 25 basis-point … [Read more...] about MC Interview | Bank of Baroda’s chief economist on why did RBI choose to hike rates off-policy

Representative image The pound tumbled after the Bank of England raised interest rates by just a quarter of a percentage point despite surging inflation, while oil prices jumped after OPEC+ only modestly hiked production. The quarter-point hike apparently disappointed investors looking for the BoE to act more forcefully to combat surging prices as the central bank now expects annual inflation to rise above 10 percent this year and the economy to contract later this year. It also followed the Federal Reserve's decision Wednesday to raise US interest rates by half a percentage point as inflation soars also in the world's biggest economy. The British pound plunged more than two percent to $1.2362 after the BoE decision, although it recovered some ground. "Although the market had priced in a 0.25-percent (rate) rise, there had been some expectation that the Bank of England would... follow the lead of the Federal Reserve in increasing interest rates by 0.5 (percentage … [Read more...] about Pound slumps after tepid Bank of England rate hike

- A + A (May 14): US Federal Reserve (Fed) Bank of Cleveland president Loretta Mester backed raising interest rates by half percentage points in the central bank’s next two policy meetings in order to tamp down surging inflation. “Unless there are some big surprises, I expect it to be appropriate to raise the policy rate by another 50 basis points in each of our next two meetings,” Mester said on Friday (May 13) in prepared remarks for a virtual appearance at the International Research Forum on Monetary Policy. Fed central bankers raised interest rates by a half point in their meeting earlier this month and chair Jerome Powell told reporters that similar moves were on the table in their next two meetings in June and July. Mester, who votes on monetary policy this year, said that once they got to September, the policy-setting Federal Open Market Committee should assess if it needs to do more to restrain inflation, which is running at the highest levels in 40 years. … [Read more...] about Fed’s Mester backs half-point rate hikes in June and July

The Fed is hitting inflation with a heavy hand, as it announced an interest rate hike of 50 basis points, or 0.5%, at the conclusion of its two-day May meeting on Wednesday afternoon. The Fed is also shrinking its $9 trillion balance sheet , effectively withdrawing pandemic-related monetary economic support, all in an effort to blunt rising prices. advertisement advertisement “Inflation is much too high,” said Fed Chairman Jerome Powell at a press conference following the Fed’s meeting. He noted that the Fed is, in response, “moving expeditiously to bring it down.” He also said that the Fed anticipates that further rate hikes “will be appropriate.” Theoretically, by increasing interest rates , the Fed makes it more expensive to borrow money. When borrowing costs go up, consumers should be less likely to make big purchases (homes, cars, etc.), squashing demand, increasing supply, and lowering prices. The rate hike was not unexpected, either, as … [Read more...] about ‘Inflation is much too high’: 3 takeaways from the Fed meeting

The first step to managing finances and investing in the stock market should be taking ownership of the task and one needs to define her goals and the time horizon for the investment, according to Shibani Sircar Kurian, Senior EVP and Head - Equity Research at Kotak Mahindra Asset Management Company. Kurian believes that 2022 would be a year of bottom-up stock picking. "While the market may not be cheap on valuations, some stocks have corrected. We have a slight preference for large-caps over mid- and small-caps given the current valuations in each of the segments," she shares during an interaction with Moneycontrol . Excerpts from the interview: On Mother's Day, what is your great advice to women who are new to the stock market and what are the investment mantras you would want to share with them? I believe that the first step to managing your finances and investing in the stock market would be to ‘take ownership’ of the task. Investing would mean differently for women … [Read more...] about Daily Voice | Shibani Kurian of Kotak AMC shares investment mantras for women

- A + A NEW YORK (May 14): Investors are studying an array of indicators for clues about how much further a brutal slide in US stocks could run, with some signs suggesting the tumble in equities may not be over. The S&P 500 extended its decline to nearly 20% from January’s record peak on Thursday before an end-of-week bounce, approaching the cusp of a bear market amid concerns that persistently high inflation will prompt more aggressive US Federal Reserve (Fed) interest rate increases that could undermine the economy. Declines have been even steeper in the tech-heavy Nasdaq Composite, which is down 24.5% year-to-date. Despite those losses, many widely followed indicators do not yet show the pervasive panic, supercharged volatility and outright pessimism that have emerged in past market bottoms, a potentially worrisome signal for those looking to step in and buy on the cheap after the most recent sell-off of stocks. Indeed, stocks ripped higher on Friday (May … [Read more...] about Signs of market bottom elude investors after steep sell-off

- A + A (May 14): Chinese stocks saw a reversal of fortune this week versus global peers as investors tiptoed back into the market, betting an expected lift of Shanghai lockdowns would spur a rally. China’s benchmark CSI 300 Index rose 2% this week, standing out within a global sea of red. It’s also outperformed major peers for the month so far. Driving the turn in sentiment has been China’s stabilising Covid-19 outbreak, which helped soothe worries that movement restrictions may intensify. While the outlook remains highly uncertain, with China’s zero-Covid stance set to keep pressuring growth and the global economy looking fragile, stimulus promises from Beijing and cheap valuations are making more traders willing to take risks. “We don’t get so greedy as to try to time the market for the rock bottom,” said Yang Wei, a fund manager at Longwin Investment Management Co. “Valuations of some are now attractive enough to take the chance,” added Yang, who’s been … [Read more...] about Chinese stocks stand out as rare winners in global equity rout

Share to Twitter Share to Linkedin Key News Asian equity markets were all down overnight. It was a light news day as Fed hike fears and the strong dollar weigh on local sentiment. According to Bloomberg News, traders took profits in yesterday’s strong move in Hong Kong internet stocks despite the government meeting with internet companies next week. The meeting, announced two weeks ago, will include regulators and potentially Vice Premier Liu He, who had called for more clarity and transparency on regulation while also advocating the importance of the platform economy. The market is in a shoot-first/ask questions later mentality though I see more upside than downside in this meeting as China’s economy needs domestic consumption to pick up. It is worth noting that Tencent and Meituan saw another strong day of buying by Mainland investors via Southbound Stock Connect. Tencent reports Q2 financial results next Wednesday post the Hong Kong close. Rumors that … [Read more...] about US Dollar Strength Weighs On CNY

Share to Twitter Share to Linkedin The government’s first guess at GDP growth in Q1 was -1.4%, it was supposed to be 1% (“consensus”) but even that would be shockingly low compared to the over 6% in Q4 2021. Maybe it was just a “mathematical quirk in GDP accounting” as the trade deficit math wiped out solid consumer and investment spending. If Q2 growth follows suit in negative territory, we will have a “rule of thumb” recession of back-to-back negative quarters. The Administration sees no recession, the Fed seems to be on board as well with scheduled rate hikes still in place. But small business doesn’t agree, and they are the ones in the trenches every day making up nearly half of the private economy. Asked in March about expected business conditions over the next six months, a 48-year record high said they would be “worse” than when they filled out the survey. Fifty-four percent expected the economy to worsen. Responses have not been this negative since Q3 … [Read more...] about The ‘R’ Word: Who’s Saying It And Are They Right?

Battered U.S. stocks are facing a potentially painful stretch in the weeks ahead, as hawkish Federal Reserve policy, rising bond yields, geopolitical uncertainty and the corporate earnings season fuel investor unease. After last week’s sharp decline, the S&P is down 5.7% so far in April and is on track for its worst monthly drop since March 2020, when the spreading COVID-19 pandemic blasted stocks. One measure of investor anxiety, the Cboe Volatility Index, known as Wall Street’s fear gauge, on Friday notched its largest one-day gain in about five months to close at a five-week high of 28.21. “More variables in any equation create greater uncertainty in terms of the outcome,” said Michael Farr, president of Farr, Miller & Washington. “We have more variables now than I can remember in my career.” Chief among market participants' worries is a Fed that has repeatedly ratcheted up its hawkish rhetoric as it gears up to fight the worst U.S. inflation in nearly 40 … [Read more...] about Bruised Wall Street faces gauntlet of worries after market tumble