Jerome Powell’s surprise words lead to tapering rumours

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If last week we commented that the market’s attention was focused on the inflation data coming from the US, where we finally saw this grow to 5% year-on-year, this week the attention in the markets focused on the meeting. of the Federal Reserve and the words of its president at the subsequent press conference.

Although we cannot find any reference to the dreaded decline in the monetary policy statement, during the press conference of Jerome Powell, the chairman of the Federal Reserve announced that if the economic recovery continues at the current pace, the Fed would be happy to assess this. that possibility. at upcoming meetings. However the market consensus is not expecting announcements or reactions until after the annual Jackson Hole symposium in August.

It is worth noting that current interest rates in the United States are between 0-0.25%, with its asset purchase plan up to $ 120 billion a month. This means that some announcements of a change in the current policy could affect the major stock market indices. If fingerprinting began, monthly purchases would be reduced.

As we mentioned in previous articles, the main one affected by a possible rise in interest rates is the Nasdaq technology index, as the debt structures of such companies make them the most sensitive to this type of change.

If we look at the daily chart of the NQ100, we can see that after surpassing the green resistance zone marking new historical highs, the price started a correction looking for its 18-session moving average, which currently serves as its main support level due to increased doubts volatile.

Currently the price has several levels of support before reaching the long-term high trend line, so if it doesn’t lose these levels, the sentiment will remain reversed. Despite this, we will have to be very attentive to the following macro data and the possible words of the Federal Reserve or the US Treasury by Janet Yellen, before possible changes in the current policy.

mceu 18316695021623932969752Source: Admiral Markets MetaTrader 5. Daily letter of the NQ100. Data range: 19 October 2020 to 17 June 2021. Prepared on 17 June 2021 at 10:50 am Please note that past returns do not guarantee future returns.

Evolution in the last 5 years:

  • 2020: 43.64%
  • 2019: 35.23%
  • 2018: -3.88%
  • 2017: 28.24%
  • 2016: 7.50%

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