The major US stock market indices, Dow Jones, NASDAQ, and S&P 500, all finished Friday with a modest gain, but what difference does that make if the US stock market keeps declining? Of course, no instrument can move continuously in a single direction. There should be rollbacks and adjustments. Therefore, Friday's growth is meaningless. There is a clear "bearish" tendency, and like with bitcoin, it might continue at least through the end of this year. At the moment, the circumstances affecting the movement of instruments have remained the same every day for weeks and months. Remember that the Fed increased the key rate to 1.75%, and the market is increasingly receiving signals that the rate will increase by 0.75% once more at the meeting in July. Also, remember that a 0.5% increase is already seen as an "aggressive monetary strategy," and a 0.75 increase is an ultra-aggressive approach. Risky investments, therefore, have no choice but to keep sliding. Both Bitcoin and all three top US indices are very close to their recent lows. Risky assets, then, have a very tough time even rising.
At the same time, Loretta Meister, the head of the Federal Reserve Bank of Cleveland, publicly declared her support for a hike in interest rates of 0.75% in July. There is a slight caveat, though: only if the state of the economy remains unchanged. But with only a few weeks till the commencement of the FOMC meeting, what is possible to change? Most people are now anticipating the next inflation data for June. No one will wait for additional reports if it does not indicate a significant slowing in the consumer price index. Remember that by the end of May, inflation reached 8.6%, and according to the latest predictions, by the end of June, it will reach 8.7%. On July 13, the report will be released. I did not see the inflation data. I need to understand that we can return to an increase of 0.5%, said Loretta Meister. "If the economic conditions before the meeting are the same as today, I would support an increase of 0.75%." The head of Cleveland also predicted that the rate will climb in the next two years to 4-4.25% and that an increase to 3-3.5% is all but certain. Even this level of unemployment will be regarded favorably, though. As we can see, many of the monetary committee's members are siding with James Bullard. He advocated hiking the key rate as rapidly as feasible just a few months ago.