Article Hero

The future of long-term interest rates is in question – Market Overview

1614857450.png
Miguel A. Rodriguez
Miguel A. Rodriguez
05 listopad 2022
There is a wide-open debate in the market about the future evolution of long-term interest rates, their implication in future monetary policy decisions and the consequences for stocks.

The ECB does not show a clear direction in this regard. On the one hand, they state that they will not allow increases in interest rates in the long part of the curve due to their negative implications on financing conditions. On the other hand, as it was the case today with Board Member Klass Knot's statements, they consider that these increases respond to expectations of growth for the economy and can be perceived as positive.

The Federal Reserve has a more unified discourse, and from the beginning, they have not expressed any concerns in this regard. However, it is also true that since their asset purchase program is unlimited, they could increase purchases and stop the fall of the treasury bonds at any moment.

Market participants highly anticipate the appearance of FED President Powell this afternoon. They expect Powell to give more clues regarding the future of monetary policy and make a more explicit reference about Fed’s position on this matter.

Meanwhile, concerns about the future evolution of the stock markets are increasing. Uncertainty about the future of interest rates and rising inflation expectations, especially in the United States, is starting to weigh heavy on the leading world indices.

After a slight technical recovery at the beginning of yesterday's session, the main indices have once again experienced a fall, trading in areas that point to more significant corrections or even a potential change of trend.

The Tech100 technology index, the one that has had the best performance during the pandemic crisis, is the one that is being most punished in this new scenario.

Technically it has closed below the 12691 support level and triggered a reversal pattern that points to a theoretical target around 11468.

Powell's statements this afternoon may be a factor that could finally define this movement or, on the contrary, slow it down should it show a clear determination to prevent long-term interest rates from continuing to rise.

Something similar is happening with the Japanese stock index, Japan225. After having recorded an outstanding performance in recent months, it finds itself at the point below which a more profound bearish path would open.

Technically below 28,947, the index would head towards a target zone situated around the 100-day SMA line, currently at the 27,000 zone.

Another element to take into account and that could significantly influence the market will be the result of the labour market data published today and tomorrow, Unemployment Claims and Non-farm payrolls.

The ADP Non-farm Employment change data was published yesterday, showing a lower figure than expected, 117K vs 177K, and marking a negative precedent for the upcoming NFP report.

Sources: Bloomberg, Reuters.

Uvedené informace zpracovala společnost CAPEX.com/cz a nepředstavují investiční doporučení. Uvedené informace poskytujeme v rámci naší marketingové komunikace pouze pro informační účely, nebyly připraveny v souladu s právními předpisy upravujícími šíření nezávislého investičního průzkumu a nevztahuje se na ně zákaz obchodování před šířením investičního výzkumu.Uživatelé / čtenáři by se neměli spoléhat výhradně na informace, které jsou zde prezentovány, a měli by také provádět vlastní výzkum / analýzu a také četli skutečný podkladový výzkum. Obsah je obecný a nezohledňuje individuální osobní situaci, investiční zkušenosti nebo současnou finanční situaci.Společnost Key Way Investments Ltd proto nebere žádnou odpovědnost za ztráty obchodování z důvodu použití a obsahu zde uvedených informací. Minulá výkonnost a předpovědi nejsou spolehlivým ukazatelem budoucích výsledků.

Share this article

How did you find this article?

Awful
Ok
Great
Awesome

Přečtěte si více

Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books. 

Rozdílové smlouvy jsou komplexní nástroje a v důsledku použití finanční páky jsou spojeny s vysokým rizikem rychlého vzniku finanční ztráty. U 69.69% účtů retailových investorů došlo při obchodování s rozdílovými smlouvami u tohoto poskytovatele ke vzniku ztráty. Měli byste zvážit, zda rozumíte tomu, jak rozdílové smlouvy fungují, a zda si můžete dovolit vysoké riziko ztráty svých finančních prostředků.