What has actually changed over the past two months?
In early October, the markets were delighted by the Fed trying to impose the initial idea of a gradual raise in interest rates.
All of a sudden, everything changed, except for economic data. For Goldman we see a slight decrease in data for the past two months. In view of the catastrophe of financial markets, economic values surprisingly remain stable. Here we mostly talk about employment, wages and inflation data.
However, the more significant change that Goldman finds is in financial terms. Since early October, they have risen by about 80 basis points, according to the bank's estimates, which could cut GDP by between 0.75 and 1% next year.
Tightening financial conditions may lead to lower interest rates than originally thought. According to the bank, the Fed must react as a result of the economically feasible lasting effects on the financial environment by tailoring its expectations and the interest rates.
Goldman predicts three interest rises for next year of four originally planned, but bank economists are also adjusting for overall slowdown in the rally. Chance to raise interest rates in March is below 50%. For signals, they advise us to observe the dot plan that will be refreshed at their meeting this month.
Graphs: Used with permission of Bloomberg Finance L.P.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.