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Inflation pressure makes today's FED meeting the topic of the hour.

Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
Will the FED take aggressive measures to stop the alarming price increase?

Inflationary pressures have fueled investor concerns about the possibility of a restrictive approach from the FED at today's central bank meeting.


The S&P 500 fell 0.70%, the Dow Jones Industrial Average fell 0.26%, and the NASDAQ Composite lost 0.92%.


Technology stocks were affected the most, having a drastic fall, as investors considered them less attractive in times of rising interest rates and inflation.


Microsoft led the big tech sell-off down about 3%, while Google, Apple, Facebook and Amazon also finished in the red.


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The US producer price index rose 0.8% in November, above the 0.5% average market forecast after a 0.6% figure in October. Producer prices rose 9.6% in November, the most significant increase compared to last year's figures.


The Federal Open Market Committee ends today it's meeting that started yesterday. It is expected to decide to double its bonds purchase reduction rate, decreasing to $30 billion per month to give it space to raise rates and curb the threat of inflation.


The Fed has been under pressure in recent months to act in this regard. Still, after waiting so long and falling behind the curve, it may have to take the more aggressive action necessary to stop the worrying price increase, which would inevitably have a significant consequence for growth.


The US Dollar strengthened yesterday against all its counterparts due to expectations of higher interest rates. However, this was not reflected in the fixed income market, which maintained yield levels with slight increases.


GOLD, a very sensitive asset to both inflation and interest rates, fell significantly, around $16, despite the high inflation figures, and also driven by expectations of strong action from the Fed at today's meeting. The future performance of the precious metal will largely depend on what the Fed decides today.


Technically it fell to the reference zone around 1765. Below, the next support levels are 1723 and 1680.


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Sources: Bloomberg, Reuters

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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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.