Fed interest rate decision with technical analysis and forecast
First, what’s wrong with rising rates? Well, investors are split on whether the Fed will implement a quarter-point hike or take a break. The bond market is giving a 65% chance of a quarter-point hike that will take the Fed’s key rate to 4.75%-5%. Traders reduced the odds of a hike, but Goldman Sachs and Barclays revised their rate forecasts to no rate hike.
Now, if you’re a futures trader, you know that rate hike forecasts can change in the blink of an eye. If Credit Suisse and the First Republic struggle, we could see some volatility ahead of Wednesday’s announcement. But let’s face it, the Fed is pretty handcuffed right now. If they raise rates one more time, it’ll probably only be a 25bps hike before stopping.
But should they even walk at all? The Fed has been tightening rates from near zero over the past year, and that’s starting to show damage to the economy. Inflation is high and the US labor market is tight. Some experts suggest the Fed should halt rate hikes altogether.
What should a technical futures trader do? Keep an eye on price action and the S&P 500 emini futures chart, of course! Watch more technical analysis video for S&P 500 emini futuresnote the bullish and bearish key price levels, look at the clues given by the chart and consider my directional forecast.
The above advice is not investment advice. Visit ForexLive.com for additional views.