Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62.96% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
62.96% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62.96% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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The Minutes of the Fed’s December Meeting Were Hawkish | U.S. Stocks, Crude Oil, and Gold Prices Fell Across the Board

The Federal Reserve released the minutes of its December Federal Open Market Committee (FOMC) monetary policy meeting, which sent a hawkish signal.  After the announcement, U.S. stocks, WTI crude oil, and gold prices fell across the board, with the Nasdaq falling over  500 points, the biggest one-day drop in the past ten months. So what were the highlights of the meeting’s minutes?

 

At present, the size of the US Fed balance sheet has hit a record $8.8 trillion, and the market is generally concerned about when the Fed will start tapering its bond purchases and the intervals between raising interest rates and ending asset purchases.

 

As for the rate hike timing, U.S. swap market prices showed yesterday that there is an 80% chance the Fed would raise rates in March. We can see that the market's expectations for interest rate hikes have also accelerated. After the FOMC meeting minutes were released, the U.S. dollar and U.S. bond yields rose as the Fed maintained a hawkish attitude. The 10-year U.S. Treasury yield once rose to 1.7787%, the highest level since April 2021, putting the price of gold under pressure causing it to fall sharply. 

 

The price of gold fell from about $1,823 per ounce on January 5 to about $1,808 per ounce in early trading today. The downward trend persisted due to the changing market expectations regarding the timing of interest rate hikes. It is expected that the trend of falling gold prices will continue for some time in the long run.

 

At the same time, concerns have been raised about the very tight U.S. labor market, including record turnover and vacancy rates and a significant pickup in wage growth. Many of the officials at the last meeting acknowledged that "the U.S. economy is moving fast toward the Fed's full employment goal." Officials are determined to raise interest rates, as they believe that the inflation target has been met before the rate hikes.


The market is pretty worried about the impact of the Omicron variant on the US economic outlook, and the minutes of the FOMC meeting also responded to this. However, the stock market has already digested the impact of the rising cases of the new COVID-19 variant. Multiple participants said that uncertainty over the U.S. economic outlook remains high as the pandemic continues to pose downside risks to the economy combined with the upward pressure from inflation.

Last Updated: 06/01/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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