Jerome Powell rekindles rumours of possible tapering during press conference
If last week we commented that the market's attention was focused on the inflation data coming from the United States, where we finally saw how this has soared to 5% year-on-year, this week the attention in the markets has focused on the meeting of the Federal Reserve and the words of its chair at the subsequent press conference.
Although we cannot find any reference to the dreaded tapering in the monetary policy statement, during Jerome Powell's press conference, the chairman of the Federal Reserve announced that, if the economic recovery continues at the current pace, the FED would be willing to assess this possibility at forthcoming meetings. However, the market consensus does not expect any announcements or reactions until after the annual Jackson Hole symposium in August.
It should be remembered that current interest rates in the United States are in the range of 0-0.25%, with its asset purchase plan totalling up to $120 billion per month. This means that any announcements involving a change of the current policy could affect the main stock indexes. If tampering were to begin, the monthly purchases would be reduced.
As we have mentioned in previous articles, the main one affected by a possible rise in interest rates is the Nasdaq technology index, as the debt structures of such companies make them the most sensitive to this type of change.
If we look at the daily chart of the NQ100, we can see that after briefly overcoming the green resistance zone marking new all-time highs, the price has started a correction in search of its 18-session moving average, which currently acts as its main support level due to increased doubts and volatility.
At the moment, the price has several levels of support before reaching the long-term uptrend line so as long as it does not lose these levels the feeling will remain upside. Despite this, we will have to be very attentive to the next macro data and the possible words by the Federal Reserve or by the US Treasury through Janet Yellen, in the face of possible changes in the current policy.
Source: Admiral Markets MetaTrader 5. Daily chart of the NQ100. Data range: October 19, 2020 to June 17, 2021. Prepared on June 17, 2021 at 10:50 a.m. CEST. Please note that past returns do not guarantee future returns.
Evolution in the last 5 years:
- 2020: 43,64%
- 2019: 35,23%
- 2018: -3,88%
- 2017: 28,24%
- 2016: 7,50%
With the Admirals Trade.MT5 account, you can trade NQ100 Contracts for Differences (CFDs) and more than 3000 stocks! CFDs allow traders to try to profit from the bull and bear markets, as well as the use of leverage. Click on the following banner to open an account today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Roberto Rojas (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.