The market expects the Federal Reserve to keep interest rates at current levels given the recent spike in inflation in the United States.
Wall Street opened lower on Tuesday after a green start to the week, as a monetary policy meeting of the United States Federal Reserve (Fed) begins. The market expects rates to remain at a similar level to the current one.
After the first operations, the star index, the industrial Dow Jones, lost 0.8% as did the technological Nasdaq. For its part, the expanded S&P 500 index – of the 500 main companies – fell 0.7%.
The Fed will have an important meeting on Tuesday and Wednesday in which analysts expect prudence to prevail and the central bank to be willing to maintain interest rates at current levels – in the range of 5.25 to 5.50% – in the face of the recent rise in inflation in the United States.
Investors have had to continually lower their expectations about the timing and magnitude of U.S. rate cuts this year after inflation reports came in above forecasts. Markets now value the possibility of a downgrade in September at 57%, CME’s FedWatch tool showed.
The shift in rate expectations has pushed up Treasury yields and the dollar, dominating the currency market. The greenback gained 0.1% against a basket of six prominent currencies, at 105.76 units, accumulating an increase of more than 1% in April and more than 4% this year.
In raw materials, crude oil prices advanced around 0.5% and spot gold lost 0.9%, to $2,313 per ounce.
Source: Ambito
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