Markets Pressured By Uncertainty
Tensions Are Growing In The East
Tensions are heating up as Russia massed an estimated 100,000 troops along Ukraine's border, encircling the country from the north, east, and south. Russia denies plotting an invasion and points to the Western response as proof that Russia is the victim of aggression rather than the perpetrator.
- NATO announced on Monday that it was putting soldiers on alert and bolstering eastern Europe with extra ships and fighter jets in response to Russia's troop build-up on the Ukraine border, which Russia called "hysteria."
- According to the US Department of Defense in Washington, some 8,500 American troops have been placed on high alert and are waiting for orders to move to the region if Russia invades Ukraine
The Fed's Meeting
At its meeting on Wednesday, the Fed might confirm its plans to hike rates and reduce its holdings of US Treasury bonds and mortgage-backed securities, which have ballooned to more than $8 trillion.
- Despite the fact that it may not raise interest rates until March, officials' tougher talk about inflation is already taking effect
- Borrowing prices are rising for everyone from homebuyers to the federal government, and stock markets are starting the year in the red
The speed with which that adjustment is taking place has prompted an unexpectedly critical question for US central bank officials: Are financial markets tightening too quickly for the Fed's inflation-fighting goals, or is the Fed underestimating what is required to curb inflation?
BENCHMARK'S TAKE
- In the U.S., high inflation is preventing the Biden Administration to push it large infrastructure spending bill forward, removing any hopes of additional stimulus in the U.S.
- At the same time, the Fed is backtracking on its earlier mistakes and is now tightening again
- Russia's invasion fears do not help European markets forward and put additional pressure on global stocks
- Valuation of most stocks were elevated at the start of the year and a cool down in equities might not be done yet as these still hoover in the upper echelons
Disclaimer
Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.
Credits