Fed Rate Hike, ECB Emergency Meeting, Bitcoin at $20k – What’s Moving Markets This Wednesday By Investing.com

© Reuters

By Geoffrey Smith

Investing.com — The U.S. Federal Reserve is expected to raise interest rates by 75 basis points in the biggest rate hike in nearly 30 years. The European Central Bank is calling an emergency meeting to try to stem the explosion in euro zone bond spreads. U.S. retail sales for May are expected, and Chinese retail sales and industrial production data show an improving economy as major lockdowns in Shanghai and elsewhere were lifted. The is bouncing off the support at $20,000. Apple and disney are spending big on sports rights, and oil is falling after a modest rise in U.S. inventories, but the outlook remains challenging, according to the International Energy Agency. Here’s what you need to know in the financial markets this Wednesday, June 15.

1. Fed ready for biggest rate hike since 1994

The Federal Reserve is expected to raise the Fed Funds target range by 75 basis points to 1.5%-1.75%, which would be its biggest rate hike in 28 years.

Investors quickly reassessed their expectations following the release of the inflation report for May on Friday, in which the consumer price index hit 8.6%, its highest level in four decades. . Among other things, the Fed will weigh the potential benefits of more aggressive action now against the negative effect it could have on the credibility of its forward guidance, which clearly indicated a half-point hike up to at the start of his usual blackout period before the meeting.

The Fed’s 8:00 p.m. forecast will also take into account the latest signs of momentum in consumer spending. Data for May is expected at 2:30 p.m.

2. Panic in the streets of Frankfurt

The European Central Bank has called an emergency meeting in a bid to stem the explosion of volatility in eurozone bond markets.

Bond spreads, a typical barometer of financial stress in the euro area and reflecting market fears that countries will be forced to leave the monetary union, widened sharply after the ECB failed to provide information on the how it intended to contain spreads as it embarks on its first major policy tightening in a decade.

Bond markets reacted positively to the news, with the bond’s yield falling 19 basis points at 2:05 p.m. to trade at 4.03%. On Monday, it crossed the 4% mark for the first time in more than eight years. This is a level that Italy will struggle to maintain unless its growth picks up sustainably from what it has recorded so far since joining the eurozone in 1999. , meanwhile, rose 0.7% to $1.0482.

3. Stocks are ready to rebound; sports rights deals are being considered

US stock markets are expected to open higher later, but much will depend on the Fed’s decision and, before that, the retail sales print.

As of 2:10 p.m., the were up 133 points, or 0.4%, on track to end a five-day streak of declines. rose 0.5%, while rose 0.7%.

The tone was also helped by better-than-expected data on the and the in China overnight, which boosted hopes that the country is tackling its lingering issues with COVID-19.

Among the stocks likely to come under scrutiny are Apple (NASDAQ:), which has agreed to pay at least $2.5 billion for the streaming rights to US Major League Soccer, while that Walt Disney (NYSE:) will also come under scrutiny after agreeing to pay $3 billion to continue broadcasting Indian Premier League cricket. She lost the contest for the streaming rights to a joint venture of and the Indian company.

4. Bitcoin rebounds to $20k as MicroStrategy fails to calm nerves

fell another 9% to hit a fresh 18-month low, before bouncing – halfheartedly – ​​off the $20,000 level.

“Digital gold” is now down 33% in the past seven days, delivering another blow to its proponents’ claims of its ability to act as a store of value.

meanwhile, fell another 10.5% and is now down 43% over the past week, as the collapse of cryptocurrency lender Celsius Network continues to send shockwaves through the cryptocurrency ecosystem. tokens tied in some way to the Ethereum blockchain.

MicroStrategy (NASDAQ:) CEO Michael Saylor said on Tuesday that his company – a de facto leveraged cryptocurrency hedge fund – had enough additional collateral to prevent any margin calls on a loan of $205 million which the company says would trigger at a price of $22,000.

5. Oil down as rising inventories trump IEA warning

Crude oil prices fell slightly, despite a fresh warning from the International Energy Agency that demand is likely to outstrip supply next year.

The IEA pointed to the possibility of a prolonged decline in Russian production that may only be partially offset by production growth in the Middle East and the United States.

The IEA pointed to the possibility of a prolonged decline in Russian production, which may only be partially offset by increased production in the Middle East and the United States.

By 2:30 p.m., futures on the were down 1.2% at $117.53 a barrel, while the were down 1.0% at $119.98 a barrel. The US government releases inventory data at 4:30 p.m., a day after the US reported a surprising but slight rise in crude inventories.

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Fed Rate Hike, ECB Emergency Meeting, Bitcoin at $20k – What’s Moving Markets This Wednesday By Investing.com

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