As the Federal Reserve prepares to make a key announcement, expectations for inflation statistics in US equities, treasuries, and Bitcoin have shifted noticeably. In anticipation of a reduction in interest rates decreases, there has been a hawkish shift ahead of the Fed meeting and the economic outlook.
Chinese markets began higher following the Lunar New Year vacation but continued to fall throughout the day. Meanwhile, equities in the United States finished down, following a pattern of overnight drifting and a panic bid at the open that rapidly faded, giving way to further selling. The Dow Jones Industrial Average dropped by 0.8%, while the Nasdaq dropped by 2%.
Today’s market decline wiped out all of last Friday’s gains, while TICk data revealed virtually little positive news. Despite today’s decline, the Nasdaq is on track for its best start to a year since 2001, despite closing below its 200-day moving average.
The market action was perceived as a reload for shorts after last Friday’s short squeeze, and the subsequent increase in the market has been described as a “rush for garbage”.
Treasuries were sold throughout the curve in the bond market, with the long end outperforming and the belly losing. The US dollar recovered to the top end of its recent narrow range, while Bitcoin was hammered twice after dropping just short of $24,000. Despite fears about Middle Eastern security, oil prices fell, while gold prices fell somewhat.
The Ark Innovation ETF (ARKK), which dipped today, is on track to have its greatest month ever, with a 25% gain. This serves as a reminder of the present market frenzy and emphasizes the extraordinary market activity experienced in January thus far.
As the Federal Reserve prepares to deliver its decision, the market will be watching intently to see how it affects the current market frenzy.
The Federal Open Market Committee (FOMC) meets eight times a year for two days each. The FOMC announces its monetary policy decision at 2 p.m. Eastern time, followed by a news conference with Fed Chairman Jerome H. Powell at 2:30 p.m.
Market investors frequently pay particular attention to the press conference, since the FOMC comment on the interest rate decision may often be more important than the formal policy statement.
The next FOMC meeting is slated for January 31-February 1, with the policy statement to be delivered at 2 p.m. Eastern time on February 1.
