Week in a Glance: Fed Vector Change, Surprise of the Bank of Eng

The past week can be safely called the week of the Central Banks. The meetings were held by the Fed, ECB, Bank of England, Bank of Japan, Bank of Turkey and a number of other central banks. Based on their results, a shift in the global vector of monetary policy is becoming more evident. But if earlier it was about the actions of relatively insignificant central banks such as Poland, now such titans as the Fed and the Bank of England have begun to tighten monetary policy. But first things first.

We have already written more than once that inflation is a global phenomenon and has affected almost all countries of the world. But if earlier the majority of central banks tried to pretend that it was not there or that it was temporary, then last week showed that it is no longer possible to hide the obvious.

As a result, the FOMC Fed on Wednesday radically accelerated the completion of the bond purchase program, which is now due to end in March. In addition, the Fed now expects 3 rate hikes next year. The Bank of England went even further and on Thursday raised the rate by 0.15%.

For the stock markets, this is an extremely wake-up call. Especially when you consider that the Bank of England raised the rate against the background of an uncontrolled increase in the number of diseases due to the raging in the country of Omicron. The World Health Organization said on Saturday that the omicron variant of the coronavirus has been reported in 89 countries. The number of cases doubles in 1.5–3 days where the omicron appears. Well, the saddest thing is that the new strain is rapidly spreading in countries with a high level of population immunity.

In general, the pre-holiday week starts in a very negative way for the financial markets. The moment is now very unfavorable for the growth of prices for risky assets, so we continue to recommend selling in the US stock market, the cryptocurrency market, as well as commodity markets.