The DAX is stuck in a triangle of interest rate pressure, Middle East risks, and AI doubts. Investors are eagerly awaiting today's Fed key interest rate decision and the subsequent speech by the Fed Chair. However, the real message is not expected until after the rate decision. Investors are likely to scrutinize the press conference with Kevin Warsh for monetary policy hints and weigh every word. Even a half-sentence on inflation and interest rates is likely to send investors' adrenaline levels soaring.
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US Federal Reserve could raise interest rates – Concerns about further rate hikes this year
The US central bank, the Federal Reserve, is set to decide on the benchmark interest rate level today. Just hours before the decision, the CME Group's „Fed-Watch-Tool“ estimates that a total of 92.8 percent of market participants expect a rate hike of a quarter of a percentage point. In contrast, only 7.2 percent expect a pause in rate hikes. The interest rate band itself currently stands at 3.50 to 3.75.
Of even greater importance, however, is the probability with which investors will expect potential interest rate hikes for the subsequent central bank meetings following the event. Further key interest rate decisions are scheduled for October 28 and December 9 of this year. For the October meeting, 40.1 percent, and for the December meeting, 27.7 percent, expect a corresponding interest rate hike totaling a quarter of a percentage point.
Weekly US initial jobless claims in focus on Thursday
Later in the week, the weekly initial US jobless claims are also on the agenda on Thursday (2:30 PM), which could likewise provide monetary policy impulses.
At the beginning of the month, the US labor market data (Non-Farm Payrolls) showed job creation of 162,000, whereas an increase of only 55,000 had been expected beforehand. The separately calculated unemployment rate remained unchanged at 4.1 percent.
