US Investors: Fed Rate Hike Accelerates Global Recession
https://sputniknews.com/20220930/us-investor-fed-interest-rate-hike-fueling-global-recession-1101398516.html
US Investors: Fed Rate Hike Accelerates Global Recession
US Investors: Fed Rate Hike Accelerates Global Recession
WASHINGTON (Sputnik) – The Federal Reserve’s decision to raise interest rates again is fueling a global recession, says Navigator’s director… 30.09.2022, Sputnik International
2022-09-30T23:47+0000
2022-09-30T23:47+0000
2022-09-30T23:46+0000
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Last week, the Fed hiked rates for the fifth time this year in an attempt to keep inflation above 8%, the highest in 40 years. The central bank has raised the federal funds rate, which has been close to zero since the beginning of the year, by another 75 basis points to put him in the 3.00-3.25% range, and indicated it could raise another 125 basis points by the end of the year. Fed Chairman Jerome Powell had suggested in his post-hike comments that the central bank would keep raising rates until inflation fell to 2%. , characterized by record inflation and skyrocketing energy prices. , supply chain problems, and capital market turmoil. Shostak said after the Federal Reserve hiked rates to 3.00-3.00%, “then embarked on a record series of very slow rate hikes. This is another one.” It’s two extremes: the whole world is bearing the brunt of the Fed’s short-sighted actions.” US sovereign bonds and equities in the 3.25% range have lost more than $57 trillion in value in 2022 combined, trading much like emerging market paper. The $24.6 billion iShares 20+ Year Treasury Bond ETF (TLT) is down 26.4% through Sept. 13. This is Finance 101. As interest rates go up, bond values go down,” he explained. “What’s astonishing this time around is the speed at which these bonds are losing valuations,” it said, suggesting the Fed has set a new target rate of 4.5%. We expect to see unprecedented and significant portfolio losses, including international holders, especially Japanese, Chinese and UK funds,” Shostak said. Since 1949,” added the investor. “Investors are understandably shocked, and their faith in America as a ‘safe haven’ has been eroded and shaken once and for all.”
https://sputniknews.com/20220921/us-federal-reserve-ups-interest-rates-by-75-base-points-in-fifth-straight-anti-inflation-hike-1101062159.html
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US Federal Reserve, interest rates, price hikes, investors
US Federal Reserve, interest rates, price hikes, investors
WASHINGTON (Sputnik) – The Federal Reserve’s decision to raise interest rates again is fueling a global recession, Kyle Shostak, director of Navigator Principal Investors LLC, told Sputnik. rice field.
Last week, the Fed hiked rates for the fifth time this year in an attempt to keep inflation above 8%, the highest level in 40 years. The central bank has raised the federal funds rate, which has been close to zero since the beginning of the year, by another 75 basis points to put him in the 3.00-3.25% range, and indicated it could raise another 125 basis points by the end of the year.
In comments after the rate hike, Fed Chairman Jerome Powell suggested the central bank would keep raising rates until inflation fell to 2%.
“The Fed’s rate decisions are fueling a global recession, which is the natural scenario,” Shostak said. “Continued actions by the Federal Reserve will spur global stock and bond sell-offs and significantly depreciate local currencies in many emerging markets.”
The US economy has already been in recession mode in the last two quarters, marked by record inflation, high energy prices, supply chain problems and capital market turmoil, he added.
Shostak believes the Fed got it wrong twice.
“First, it was slow to admit inflation and refused to adjust interest rates that economic realities demanded most.” The whole world is bearing the brunt of the Fed’s short-sighted actions.”
U.S. sovereign bonds and equities will collectively lose more than $57 trillion in value in 2022 after the Federal Reserve raises interest rates to the 3.00-3.25% range, Shostak said, citing emerging market papers. said it traded in much the same way.
“The U.S. bond market has fallen by about 12% on average in 2022, which is a very high number considering it was supposed to be super-safe bonds, not stocks,” he added.
Shostak noted that long-maturity bonds suffered the most severe losses because they are most vulnerable to rising interest rates.
“For example, the $24.6 billion iShares 20+ Year Treasury Bond ETF (TLT) is down 26.4% through Sept. 13. This is Financial 101. As interest rates go up, bonds go down in value.” he explained. “What is surprising this time is the speed at which these bonds are losing valuations.”
He added that it is now only a one-way street for the Treasury as the Federal Reserve has suggested setting a new target rate of 4.5%. As such, holders around the world, including international holders of U.S. Treasuries, particularly funds from Japan, China and the United Kingdom, will see unprecedentedly significant portfolio losses, he said. .
“There hasn’t been anything like that in the ‘quiet’ US bond market since 1949,” the investor added. “Investors are understandably shocked, and their faith in America as a ‘safe haven’ has been eroded and shaken once and for all.”
https://sputniknews.com/20220930/us-investor-fed-interest-rate-hike-fueling-global-recession-1101398516.html US Investors: Fed Rate Hike Accelerates Global Recession
