Results of the Fed meeting

morning-news

Gold  1768,25
(-0,21%)

EURUSD   1,2117
(-0,04%)

DJIA  33874,50
(+1,89%)

OIL.WTI  64,455
(+5,47%)

DAX   15202
(+0,14%)

Markets waited with great apprehension for the outcome of Wednesday’s Fed meeting. Even the slightest hint that the Fed is concerned about rising inflation would be enough to sharply dump all risky assets.


EURUSD

EURUSD

However, once again we have not heard any hints. The chairman of the Federal Reserve has pretended that there is no inflationary pressure on the economy. This allows a new $120 billion to be injected into the market every month.
More and more questions are being raised on the following point. The Fed started a quantitative easing programme in response to the coronavirus pandemic and the fall in GDP in 2020. But today things are different. GDP is rising and unemployment and business data are getting better and better. Then why do we need to print so much money, since everything is fine? The Fed Chairman responded that growth is visible in the economy, but it must be sustained and so far things are not so clear-cut.
At the same time another bubble is being inflated in the real estate market. Prices in many states have long surpassed the pre-crisis levels of 2008 and continue to rise. What this can lead to, we all remember very well.
It seems to us that all of the Fed chairman’s excuses are designed to hide the sad truth. That is that the main challenge is to buy new US debt (treasuries). Without the support of the Fed, interest on it would skyrocket, making it extremely expensive to service. In fact, the US government and the Fed are working in tandem and have no contingency plan.
As a result, there is no reason for the stock markets to fall and any corrections will still continue to be bought out.

03.00 China service sector business activity index in April
11.00 EU first quarter GDP
11.00 EU consumer price index for April


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.