[GAM] Fed’s ‘hawkish surprise’ warning next week… Tactile on Wall Street dotplot

[편집자] This article is a premium article published on September 18th at 04:53 am ‘Assistant for overseas stock investment’ GAM (Global Asset Management). If you sign up as a member at GAM, you can view premium articles from over 9000 overseas items.

[뉴욕=뉴스핌] Correspondent Hwang Sook-hye = Investors who checked the US Consumer Price Index (CPI) in August seem to be slowing their vigilance about the Federal Reserve’s tapering, but it has been argued that they cannot be relieved.

It is a warning that the so-called ‘hawkish surprise’ cannot be ruled out at the Federal Open Market Committee (FOMC) next week.

BlackRock is attracting attention in line with the prospect of an interest rate rise next year among investors, such as selling almost all of its gold holdings aimed at raising real interest rates.

Rather than mentioning the tapering Wall Street is watching ahead of the Fed’s monetary policy meeting on the 21st and 22nd, this is a dot chart that shows policymakers’ long-term base rate forecasts.

After Chairman Jerome Powell announced at a Jackson Hole meeting that he would taper within the year, market experts are weighing on the possibility that the $120 billion a month asset purchase program could start to be curtailed in November.

It is pointed out that whether or not there will be a direct mention of this at the FOMC in September is not a big variable in the stance that the tapering will be implemented within the year.

New York traders listen to Chairman Powell’s Jackson Hole conference keynote [사진=로이터 뉴스핌]

Investors are more concerned that this dot plot may suggest a possible Fed rate hike in 2022.

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In fact, if policymakers give hints about interest rate hikes in 2022, they are shifting their center of gravity to a hawkish stance compared to the dot chart in June that predicted two rate hikes in 2023.

This could have a bigger impact on the financial market than the mention of tapering, so Wall Street is tense ahead of the FOMC.

Investors who expect hawkish surprises are basing their predictions on signs of a prolonged rise in inflation. Although the CPI recorded an annualized rate of 5.3% in August, which fell short of Wall Street’s expectations, it still far exceeded the target of policymakers. This means that difficult situations are unfolding.

Credit Suisse (CS) issued a report, arguing that “no new information on tapering will be presented at next week’s monetary policy meeting.”

Along with three rate hikes in 2023, it is predicted that three rate hikes are expected in 2024 as well.

If CS’s forecast is correct, there is concern that the financial market may reflect the possibility of more aggressive tightening than expected at once, causing a panic.

Standard Chartered Bank also issued a report and voiced hawkish voices. According to the dot chart, a rate hike is expected in 2022.

This means that the scenario of two rate hikes in 2023 and 2024 after ending the zero interest rate policy with one rate hike in 2022 will be confirmed in this dot chart.

It is not unreasonable, as seven out of 18 Fed policy members have already said that they should raise interest rates in 2022.

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If the timing of the rate hike shown in the dot chart is advanced from 2023 in June to 2022, a ‘risk-off’ movement will be noticeable throughout the asset market, Standard Chartered Bank emphasized.

Meanwhile, in the survey results released by Bloomberg on the same day, 52 investment banks (IBs) predicted a sketch of a rate hike in 2023 after the zero interest rate policy would be maintained until 2022.

However, it is expected that there will be three rate hikes in 2024, which put more weight on more aggressive tightening than the previous survey.

In addition, The Economist expects to take an aggressive move toward tapering. It is expected that the Fed will end its program in the first quarter of next year after reducing asset purchases between November and December of this year.


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