Today, the results of the US FOMC meeting in November will finally be announced. The market consensus is that the rate hike will be 75 basis points. The market is focused on the size of the rate hike in December and the pace of future rate hikes. The market is likely to react sensitively to remarks at Fed Chair Powell’s press conference. As the market is expected to be volatile, the current market is in a neutral position.
With the US midterm elections coming up, Chairman Powell is expected to maintain the Democratic government’s stance of fighting inflation. However, in the first place, the situation where the interest rate hike of 75 basis points is repeated is not a normal situation. It seems self-evident that the Fed will consider slowing the pace of rate hikes in the near future. The problem is the way it is expressed. It will be a show of skill whether Chairman Powell’s press conference will have a well-balanced content that will not shock the market.
For US Fed officials, the fact that the employment and price statistics remain strong has become a source of headache. Yesterday’s unexpected rise in U.S. job openings in September had set back expectations of a slowdown in the pace of interest rate hikes in the market. The ADP employment statistics for October will be released today. Most market forecasts are for an increase of 185,000, a slight slowdown from the previous increase of 208,000. However, for the US Fed, which wants to cool the economy to some extent, the continued increase itself may be a problem. The index you want to check as a prelude to Friday’s US employment statistics. On the other hand, the MBA housing loan application index continues to decline, and the impact of rising housing loan interest rates due to interest rate hikes is noticeable.
A 75bp rate hike has already been assumed, so attention should be paid to Chairman Powell’s press conference. Depending on his talk, there is a possibility that there will be a large flow in USD, so be careful. Until then, it will be a nervous development, so the basics are wait-and-see.