| Ronen Menachem, Chief Economist of Mizrahi Tefahot
According to the Federal Reserve Company on Tuesday is of great importance. She emphasizes that the United States was strong even before the invasion of Ukraine, and is still strong by all indications. Things).
She also explicitly says that being too high, can go up even more than down – so the Fed needs to act and fast. The Fed does not seem to rule out the possibility that it is lagging behind the yield curve, to say the least.
It also draws attention to the fact that, both according to the market and according to the Fed’s own forecasts, it is on its way up, and fast (in succession, perhaps even in half-percent installments) – to the need to reduce the balance from the huge amount of assets the Fed has acquired. The corona.
This will mainly affect the medium-long part of the yield curve, and this is also the reason why the curve has again moved up from left to right.
So things are clear, the market reacted as it should (stocks also went down), but note: Brainard also attacks again and cautions that the Fed will act more according to data coming from the field (data-dependent policy), and less according to expectations (like those rising from the curve).
That is, if the US economy does show weakness, then despite the high inflation (which is exogenous to the US market) the rise in mortality. This point, which Fed Chairman Jerome Powell also constantly emphasizes, receives less attention in the markets, spawning with interest rate expectations and reducing the balance sheet going forward.
Of course, the jump in yields in the United States will also be felt here in Israel, in addition to expectations that will rise here for the first time this month.
The author is the chief economist of Mizrahi Tefahot Bank. This review is not a substitute for investment marketing that takes into account the data and special needs of each person.