Fed Rate Hike, ECB Emergency Meeting, Bitcoin $20,000
By Geoffrey Smith
Investing.com — The Federal Reserve is expected to raise interest rates by 75 basis points, which would be the biggest rate hike in nearly 30 years. The European Central Bank calls an emergency meeting to try to stop an explosion in eurozone bond spreads. U.S. retail sales for May are expected, and Chinese retail sales and industrial production data show an improving economy with the lifting of major lockdowns in Shanghai and elsewhere. Bitcoin is bouncing off the support at $20,000. apple and disney are spending big on sports rights and oil is falling after a modest increase in US inventories, but the outlook remains difficult, according to the International Energy Agency. Here’s what you need to know in financial markets on Wednesday, June 15.
1. The Fed braces for the 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%, in what would be its largest rate hike in 28 years.
Investors quickly revised their expectations following Friday’s inflation report for May, in which inflation hit a new 4-decade high of 8.6%. Among other things, the Fed will weigh the potential benefits of a more aggressive move 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 pre-reunion blackout period.
The Fed at 2 p.m. ET (6:00 p.m. GMT) will also take heed of the latest signs of momentum in consumer spending. May data is due at 8:30 a.m. ET.
2. Panic in the streets of Frankfurt
The European Central Bank in order to stem the explosion of volatility in the bond markets of the euro zone.
Bond spreads, a typical barometer of financial stress in the euro area and a reflection of market fears that countries will be forced out of the monetary union, widened sharply after the ECB gave no information on how it was aimed at containing spreads as it embarked on its first major policy tightening in a decade.
Bond markets reacted positively to the news, with the yield dropping 19 basis points as of 6:05 a.m. ET to trade at 4.03%. It crossed the 4% mark for the first time in more than eight years on Monday. 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. The , as for he rose 0.7% to $1.0482.
3. Stocks are ready to rebound; Sports rights deals in sight
US stock markets are expected to open later, but much will depend on the Fed’s decision and, before that, the retail sales print.
As of 6:10 a.m. ET, they were up 133 points, or 0.4%, on track to break a five-day losing streak. increased by 0.5%, while they increased by 0.7%.
The tone was also helped by better-than-expected data from China overnight, which encouraged hopes that the country is overcoming its lingering problems with COVID-19.
Stocks likely to be targeted later include Apple (NASDAQ:), which agreed to pay at least $2.5 billion for the streaming rights to US Major League Soccer on Tuesday, while Walt Disney (NYSE 🙂 will also be in focus after agreeing to pay $3 billion to continue broadcasting Indian Premier League cricket. It lost the contest for the streaming rights to a joint venture of and India.
4. Bitcoin rebounds to $20,000 as MicroStrategy fails to calm nerves
fell another 9% to a new 18-month low, before bouncing – half-heartedly – above the $20,000 level.
‘Digital gold’ is now down 33% in the past seven days, another blow to its proponents’ claims of its ability to act as a store of value.
meanwhile, it has fallen another 10.5% and is now down around 43% over the past week as the collapse of crypto lender Celsius Network continues to send shockwaves through through the ecosystem of tokens linked in one way or another to the Ethereum blockchain.
MicroStrategy (NASDAQ:) CEO Michael Saylor said on Tuesday that his company — a de facto leveraged crypto hedge fund — had enough additional collateral to prevent any margin calls on a $205 million loan whose company previously said it would trigger at a price of $22,000.
5. Oil down as rising inventories trump IEA warning
Crude oil prices eased somewhat, despite another warning from the International Energy Agency next year.
The IEA pointed to a possible prolonged decline in Russian production which may only be partially offset by production growth in the Middle East and the United States.
This followed a warning from OPEC on Tuesday in its monthly oil report that Western sanctions on Russia would likely lead the so-called OPEC+ bloc to pump less than expected this year.
As of 6:30 a.m. ET, futures were down 1.2% at $117.53 a barrel, while down 1.0% at $119.98 a barrel. The U.S. government releases inventory data at 10:30 a.m. ET, a day after reporting a surprising but small rise in crude inventories.