The federal reserve finishes their 2 day meeting and will raise interest rates at 2pm est.
What will they do?
The fed will raise rates by 75 bps points which is highly expected. There is currently a 83% chance of this happening according to the https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html. I believe it will be 75 bps because 100 bps has a 18% chance of happening and highly unlikely as it's too aggressive, I would be shocked as it's never been done before.
What does this do?
It makes home mortgage rates more expensive, increases prices for business loans making it hard for companies to grow and credit cards become more expensive! What will happen to the markets? Honestly, just volatility.. expect stocks & crypto to dump and pump throughout the day, it's very hard to make a prediction on what will happen because there is a massive wild card.
What's the word?
The head of the federal reserve, fed chair powell will be speaking at 2:30pm est. He always does this conference and this is what we NEED to watch
What will he say?
He will repeat "hey we need to fight inflation" continue aggressive hikes, labor market is strongish etc.
What to look for?
I'm watching two things, "the dot plot" which is released which is basically a graph that shows what fed members think the future of rate hikes will be.
The 2nd is the most important which is the "fed benchmark rate". This is the total of interest rates.
Example: many big investors projections are 4%(400) by the end of 2022. Our current % is 2.50%(250)
so 75 bps hike 9/21, 50 bps in November and 25 bps (75+50+25 = 150 + 250(2.50%) = 4% (400) hits that 4% target... Sticking to this is GOOD NEWS because that meants tomorrow is the last aggressive rate hike and a fed pivot can come in November (unless inflation spikes)...
However if they raise this to 4.25% or 4.5% that means no fed pivot in November and expect a 75 bps hike in November which is BAD BAD NEWS.
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