Pre-market trading: Fed officials to the market: nothing can stop us

Wall Street seems to be listening. The market now sees his 86% chance of a three-quarter point rate hike at his Fed meeting in September. CME Group.

US stocks initially plunged Thursday morning as the European Central Bank dealt with a three-quarters-point rate hike plus new hawkish comments from Federal Reserve Chairman Jerome Powell Did. But by the end of the day, they brushed it off and the market closed higher.

One by one, officials acknowledged the economic and market pain a rate hike policy could bring, and reiterated that they would maintain an aggressive government for the time being to combat rampant high inflation.

At Thursday’s think tank conference, Powell repeated His position to keep the course.

“History strongly cautions against easing policy prematurely.” .”

His comments echo those of Fed Vice Chairman Lael Brainard speaking at the Banking Policy Conference in New York on Wednesday. “It is particularly important to prevent the risk that households and businesses will start to expect inflation to remain above 2% in the long run,” he said.

Shift course: Analysts at Goldman Sachs, Bank of America and Nomura have all raised their forecasts for the next Fed policy decision on Sept. 21 from a half-point increase to three-quarters of a point, citing this week’s message. .

The data show the economy is on track to achieve the soft landing the Fed wants. Core and headline inflation were soft in July, commodity prices fell, the dollar strengthened and supply chain kinks eased. The labor market is showing signs of cooling and GDP growth is slowing.

But Fed officials suggest that this is not enough. “Fed officials have sounded hawkish lately, implying that progress toward curbing inflation hasn’t been as even or as rapid as they’d like,” said researchers led by Goldman Sachs chief economist Jan Hatzius. It seems that there is,” he pointed out.

Known unknowns: Nothing is set in stone, and a series of economic and inflation data due later this month will guide the Fed’s next move. If the CPI unexpectedly falls next week, the Fed may consider a more aggressive rate hike.

Bank of America analysts said, “We are planning a 75 basis point rate hike in September, but we recognize the risks associated with a 50 basis point hike.” We’ve received negative feedback about the out-during messaging, and it’s possible that participants feel they should stop effectively pre-announcing policy rate moves.”

UK in transition

Death of Queen Elizabeth On Thursday, Britain entered a period of national mourning for the country’s longest-reigning monarch.

That official time of reflection comes at a time of political and economic transition in the UK economy. Less than a week after Liz Truss took office as the country’s prime minister, the economy grapples with skyrocketing inflation, commodity shortages stemming from the Ukrainian war, and an imminent energy crisis.

Meanwhile, financial institutions are scrambling to find ways to honor the Queen while stemming the economic turmoil.

However, the London Stock Exchange plans to continue at full speed. The day of the Queen’s funeral is expected to fall on a public holiday, in which case the London Stock Exchange will suspend trading, but “is expected to trade normally during the formal mourning period.” said the spokesperson. CNN.

The British government confirmed plans to provide subsidies on Thursday Utility costs For homes and businesses to protect the economy from freezing this winter, Report to colleagues Lauren Kent and Anna CoobanAnalysts say the plan could cost as much as $172 billion, but it’s desperately needed. Already, the average annual utility bill for his home this year has increased by 54% to $2,263.

Trump’s SPAC pushed back

Former President Donald Trump has yet to make it public. But he lives to fight another day.

The blank check company, or SPAC, which is seeking to merge with Trump’s new media venture to go public, extended the deadline for the merger agreement to Oct. 10 after gaining shareholder support on Thursday. My colleague Matt Egan reports.

SPACs (listed shell entities set up to acquire or merge unlisted companies to go public) usually take two steps to find a company to acquire before the owner has to return the funds to the investors. It takes years.

Digital World Acquisition’s planned merger with Truth Social’s owner, Trump Media & Technology Group, has been delayed by federal investigations, prompting a $1.3 billion investment in the company’s public offering and Trump Media’s listing on the stock market. The fate of cash depended. up in the air.

My colleague Matt Egan reports that Digital World has postponed mergers many times, and initially shareholders were reluctant to go astray again. Ultimately, they came to a decision.

The merger agreement has also been postponed due to allegations that Trump Media owes contractors more than $1 million.

Trump dismissed the controversy, suggesting in a Truth Social post on Saturday that he didn’t actually want to go public. I wrote it in a typical posting style.


Kroger reports earnings before the bell.

today too →

▸ European Union officials meet to discuss energy crisis


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