The Fed vs Inflation

 

BRENDAN MCDERMID/REUTERS  

 

The Fed vs Inflation  

The market does not hesitate: the Fed will raise interest rates next week  

 

The market firmly expects the Federal Reserve to raise interest rates at next week's FOMC meeting. That's what Bloomberg writes and refers to the rising indicated interest rate in the swap trade ahead of the interest rate statement next Wednesday. 

 

- The market's view is, probably rightly so, at this point that a rate hike in July is a foregone conclusion, Janney Montgomery Scott chief strategist Guy LeBas told the news agency.  

 

Meanwhile, futures trading shows the market is pricing in a 25 basis point increase to just over 97 percent, according to CME Group's Fedwatch tool. This would mean that the key interest rate is raised to the range of 5.25–5.50 percent.

 

Analysts see an unusually stormy stock market in the second quarter's flood of reports. Robert Cohen/AP  

 

Economy 

Analysis: Off to a violent start - the stock market is ruthless  

 

The stock exchange has been "ruthless" towards companies that submitted weak reports in the second quarter, writes Placeras Daniel McPhee in a comment. Including Bufab, which fell by double digits after reporting a 37 percent increase in profit - but lower demand.  

 

DI's Mikael Vilenius states that the flood of reports started "sadly and violently". Calculated over the last seven reporting periods, stocks have never fallen as much on average as they have so far after interim years, according to the newspaper's review.  

 

As examples, Vilenius mentions companies such as Addlife, Ericsson, Bravida and HMS Networks, all of which have been punished with declines of over ten percent. The reverse applies to H&M and Vitec. 

 

"In the previous quarters, an average of 8-17 percent of all companies have moved by more than 10 percent on the reports. So far, the figure is 24 percent," writes Vilenius.