Fed rate hike expectations strengthen global financial markets overshadowed

　　Fed rate hike expectations strengthen global financial markets overshadowed

　　Xinhua News Agency, Beijing, January 7th.

　　Xinhua News Agency reporter Deng Qian

　　In the minutes of the December 2021 monetary policy meeting released by the U.S. Federal Reserve on the 5th, it released a signal that it may raise the federal funds rate ahead of schedule and start the process of reducing the balance sheet.

Expectations of the Fed to raise interest rates continue to strengthen, putting pressure on global financial markets.

　　Although the Fed has not yet made it clear when it will act, the market has clearly reacted to this "hawkish" statement, and major global stock markets have fallen.

　　The three major stock indexes in the New York stock market fell for two consecutive days. The Dow Jones Industrial Average, the S&P 500 stock index and the Nasdaq composite index closed down 1.07%, 1.94% and 3.34% respectively from the previous trading day on the 5th, and triggered the European , Asia-Pacific and other regional stock markets fell in rotation.

On the 6th, the three major stock indexes in the New York stock market continued their decline, closing down 0.47%, 0.10% and 0.13% respectively.

　　The three major European stock indexes fell across the board on the 6th.

The 100-stock average price index of the "Financial Times" stock market in London, England, closed down 0.89% from the previous trading day; the CAC40 index of the French Paris stock market fell 1.72%; the German Frankfurt stock market DAX index fell 1.35%.

　　In the Asia-Pacific stock market, the Tokyo stock market fell significantly on the 6th. The Nikkei 225 stock average price index closed down 2.88%, and the Tokyo Stock Exchange stock price index fell 2.07%.

Australia's main stock index fell 2.7% on the 6th, the biggest one-day drop for the stock index since September 2020.

　　Jay Hatfield, CEO of American Infrastructure Capital Management, said the Fed's "shrinking balance sheet" is a major risk in 2022.

Once the Fed starts shrinking its balance sheet, the impact will be devastating.

　　Analysts generally believe that the Fed's monetary policy shift may lead to a drastic change in the global financing environment, and some emerging markets face the risk of capital flow reversal.

　　The Central Bank of Argentina announced on the 6th that it will raise the benchmark interest rate from 38% to 40%.

This is the first rate hike by Argentina's central bank in a year.

Argentina's central bank said in a statement that the Argentine government hopes to maintain currency and foreign exchange market stability through interest rate policy.

　　It is foreseeable that the Federal Reserve will accelerate the pace of "releasing the accelerator", which will further promote the strengthening of the US dollar and the increase in global financing costs.

　　According to the results of a survey released by Reuters on the 7th, more than 80% of the analysts surveyed believe that the volatility of the foreign exchange market will increase in the next three months.

Overall, the tightening of the Fed's monetary policy will provide sufficient upward momentum for the dollar, and in 2022, it will show a "strong dollar" trend, and emerging market assets will face challenges.