Economies worldwide have been encountering global health crises and war challenges. Crypto is currently in a bear market after its bullish run in 2021. Investors have been experiencing a roller coaster ride in the stock market in recent years, primarily due to Wall Street’s different expectations about the Federal Reserve’s size and pace of interest rate hikes. Helprin Management Tokyo Japan believes this is an optimistic sign for investors and that it’s the perfect time to jump into the market. 

In late October 2022, the Fed inspirited investors when its policy statement acknowledged considering the delayed rate hike economic effects before deciding the next move. However, Fed Chair Jerome Powell said otherwise during a subsequent press conference about how inflation still worries the Fed.

According to Helprin Management Tokyo Japan, it’s important to remember that while Powell and other Fed members are experts in their own right, investors should focus their attention on the numbers rather than their opinions about the economy. The Fed is still dependent on data or numbers, which means it will adjust policies based on inflation, the job market, consumer spending, and other economic factors.

Powell spoke at the beginning of November, around two days before the latest job market report that shows employers are still hiring, but the unemployment rates are rising. In October, employers added around 261,000 jobs, but the unemployment rate has slightly increased from 3.5% to 3.7%. Those numbers reflect a healthy job market since the economy adds 183,000 jobs on average from 2010 to 2020. The new job market numbers will be part of the rate hike calculus considerations.

Helprin Management Tokyo Japan believes that the Fed will still use a data-driven approach in determining its next steps. The company is optimistic about Fed’s subsequent actions to benefit investors. According to our review, the stock market is prone to overanalyzing what the Fed members say about the economy without considering the actual data presented. 

Predicted Rate Hikes

Rate hike expectations constantly shift, often without notice— case and point: the Fed funds futures in time for the Central Bank’s expected December 14 meeting. The Fed currently has a 3.75% to 4% short-term interest rate following a fourth consecutive 0.75% rate hike. Last month, the market predicted a nearly 13.5% chance that they would raise the Fed funds rate from 4% to 4.25% in December, a 63% chance that it would go up to the 4.25% to 4.5% range, and a 23.5% chance it would increase around 4.5 to 4.75%.

However, due to Fed members’ recent statements and the most recent hike, there’s almost a 50-50 chance of raising to 4.25% to 4.5% or 4.5% to 4.75%. After the factors mentioned earlier, the market has entirely disregarded the odds of other smaller rate increases.

Bottomline

The US Fed will use information and data in making decisions and with the recent numbers on the job market and October inflation consumer price index figures. As an investor, you should check the numbers rather than speeches and statements.