Investors finally began to turn their full attention to the Federal Reserve’s interest rate announcement on Wednesday, when geopolitics resurfaced.
President Vladimir Putin on Wednesday ordered Russia’s first mobilization since World War II, warning the West that if it pursued what he called its “nuclear blackmail”, Moscow would respond with the might of all its vast arsenal.
The news pushed investors to rush to safe havens. The dollar index hit a new 20-year high, rising against the euro and the pound, while European stocks fell to open a new 11-week low.
Defense actions have increased, which is rarely the happiest sign from a human point of view.
Still, today’s Fed meeting is the main focus of markets around the world.
According to the CME’s Fedwatch tool, markets price the odds of a 75 basis point hike in US interest rates at around 85%, but they haven’t given up on the Fed “going Swedish” and surprising with up a full percentage point.
Sweden’s central bank raised its rate by 100 basis points, bigger than expected, on Tuesday.
Along with the rate change, investors will also be looking at the Fed’s “Dot Plot” to see responsible policies that expect rates to peak.
The Swiss National Bank and the Bank of England – which is holding a meeting reported from last week due to Queen Elizabeth’s death – are also expected to make large interest rate hikes this week.
Some investors have begun to question the collective impact of global central banks shrinking unison – with the exception of the Bank of Japan, which rolls out on Thursday but expects no change in its ultra-freedom policy .
Key developments that were expected to provide more direction to the mars on Wednesday:
US existing home sales in August
Federal Reserve rate decision and press conference
Central Bank of Brazil
rate decision Chart: Central banks are stepping up their fight against inflation,