Please find below the 5 charts that tell interesting stories on US Fed Rate Hikes and Markets.

 

1) US Fed delivers another big Interest Rate Hike of 0.75%:

 

Hikes in US Interest Rates are expected to continue till the time Inflation falls below Federal rates which is projected to happen in the coming quarters.

 

Despite last night hike of 0.75%, the 10 year yield went up by only 0.05%. Hikes are already priced in the markets.

 

There was nothing new in the US Fed Meeting. 

 

2) Monthly FPI Flows vs Fed Fund Rates:

 

Foreign Portfolio Investors (FPI) flows run much ahead of actual events in the economy.

 

FPIs started selling from Oct’ 21, much before the hike in US Rates.

 

Recent moderation in FPI selling could be a signal of the peak Fed Funds Rates cycle going ahead.

 

3) Wholesale and Retail Inflation trajectory slowing down for India and US:

 

Inflation is expected to continue coming down in the coming months due to:

 

1) Fall in Commodity Prices

2) Cooling of Shipping Costs

3) Slowdown in Global Consumer Demand

4) Fall in US Housing Sale Prices

 

 

4) Bear Markets are the Foundation for Bull Markets:

 

Historically, bull markets followed by bear markets deliver a gain of 2-3 times when compared to losses in the bear markets

 

Fed will eventually stop raising rates. Inflation will finally descend. Ukraine war will conclude at some point. 

 

Its important to stay invested in the negative phase of market so that upside followed by bear market can be captured.

 

5) Emerging Markets External Vulnerability Matrix:

 

1) India economy looks stable. The weak points are huge Govt Borrowings and high Gross Debt as % of GDP.

 

2) Turkey and Argentina continue to look highly vulnerable.

 

3) Korea and Indonesia looks good.

 

 

Read more similar articles in our blog – https://alphacapital.in/blog/

 

Best Regards

 

Dr. Mukesh Jindal CFA, CFP, CAIA, Ph.D.

 

Alpha Research