Fears of a global economic downturn and wagers on sharp interest rate rises by the US Federal Reserve boosted the safe-haven US dollar to a new two-decade high versus a basket of currencies. With worries of global inflation and a US recession on investors’ minds, Oreana’s Isaac Poole says that a policy misstep by the Fed is a critical risk for markets. While he does not anticipate a recession, he is keeping an eye on real yields that are not currently restrictive but trending in that direction. On the subject of central banks, investors will have a lot on their plates in the near future, as policy meetings of the Federal Reserve, the Bank of England, and the Swiss National Bank will all be held. The Federal Reserve is expected to boost its key interest rate by 50 basis points. According to Isaac, the bond market is giving the Fed permission to act more swiftly, and it isn’t easy to see what might prevent a 100-basis-point rise at the Fed’s next two meetings.
(Source: Ausbiz)

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