Tag: Interest Rate Hike

Will Santa Be Happy With Yesterday's Rate Increase?

Posted on by The INO.com Team

Before I dive into yesterday's rate increase, I just want to ask you, are you enjoying the 12 Days of Trading Tips? It's always a good thing to refresh your mind and energize yourself by reviewing some of the fundamentals of trading. I think today's trading tip on market timing is one everyone should read as it underscores the old market saying, "Bulls make money, bears make money and pigs get slaughtered."

Yesterday Janet Yellen, Federal Reserve Chairman, finally gave her long-awaited blessing to raise interest rates. It's perhaps the most anticipated rate hike in history and the first jump in almost a decade. I believe that the Fed should have acted months ago and they are still trying to figure out how to clean up the mess they created. Continue reading "Will Santa Be Happy With Yesterday's Rate Increase?" →

Why The Euro Is Rising And Why It Can't Last

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


For the investors who are watching the Euro, its latest behavior might appear bewildering. After all, the ECB, slightly undershooting expectations, still increased its target asset purchases to roughly €1.5tn. At the same time, the ECB cut the deposit rate to -0.3%. And let's not forget the goings on over on the other side of the Atlantic. There, the Federal Reserve is gearing towards its first rate hike in almost a decade. What, then, could possibly incentivize investors to buy Euros? And can it last?

Draghi's Words Hit a Nerve

When investors expect more central bank easing, they also expect the obligatory rhetoric. But what they hate is when the rhetoric is of a very specific sort. In this case, it is when a central banker stresses the limitations of monetary stimulus. Yet, in practically the same breath, they drive home the need for more government input. And essentially, that is exactly what Mario Draghi said.

Now, when the Fed unleashed similar rhetoric, it was seen as a signal that its ammunition might be running out. Earlier this year, the BoJ had made a similar statement in an attempt to lower expectations of more stimulus. Continue reading "Why The Euro Is Rising And Why It Can't Last" →

Fed Watch: December Rate Hike Likely Based on Fed Official's Language

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


Over the past few weeks, the likelihood of a December rate hike by the Federal Reserve Bank has grown substantially. Both economic data and hints from a number of Federal Reserve policymakers now point towards a December rate hike and now on Wall Street 70% of investors polled believe a rate hike in December is possible. So let us take a look at the data and what Fed officials are saying that is making investors believe a hike is coming.

Data

One of the most compelling data points is the October jobs number. Expected to come in at 185,000, but blew that figure out of the water when actually coming in at 271,000. The unemployment rate fell to 5%, from 5.1% and average hourly earnings rose 0.4% for the month. Furthermore, the increase in pay on a year-over-year basis was 2.5%, the highest increase the jobs market has seen since July 2009. Continue reading "Fed Watch: December Rate Hike Likely Based on Fed Official's Language" →

Fed Rate Hike Could Come in November

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Once again a Fed rate decision is coming. Yet, unlike the rate decision in September, investors are at ease. Recently, we've seen disappointing non-farms, weak retail sales and plunging new home sales. So, given that, it would seem that the Fed's decision is obvious. Of course, investors have come to the conclusion that a rate hike won't be coming. But investors are wrong, both in the perception of a soft US economy and in their conclusion.

Housing Market Not Really Weak

The first argument that Fed doves are using is the weak new home sales figure. It's true; the figure did undershoot. But take a look at US housing in the global scheme of things. It means nothing. In fact, the US housing market is actually getting stronger.

Here's why… Continue reading "Fed Rate Hike Could Come in November" →

Next Week Could Change Everything

Posted on by The INO.com Team

Next week, the Federal Reserve Board is set to meet between the 15th and the 17th to discuss the economy and if they should raise interest rates. There is not a unanimous opinion either in the marketplace, or the Fed itself regarding interest rates.

Should they choose to incrementally raise interest rates, the reaction in the market would tell us a lot about what the next big swing is going to be in stocks. I am not an economist nor do I have a crystal ball or inside track on what the Fed wants to do. What I do know is that the market will tell us what it wants to do and not the Fed. Right now, the major trend is down in all the indices and shows no real signs of reversing that trend any time soon. Continue reading "Next Week Could Change Everything" →