💣Equity market struggled🧸

Stocks fell on Monday as investors struggled to maintain a positive note after more than-expected job openings dented hopes that the Fed will tone down on its aggressive rate hike intention. 

The labour market is still not cooling, and this should pin the wings of the Fed in providing a dovish tone. A firmer labour market hints at a possible strong wage growth that feeds into the inflation fever. 

💎The Fed stage has arrived🗽

The key highlight will be the FOMC conference meeting. If Uncle Powell’s comments do not show any signs of the rate hikes slowing down, we could see a significant dollar strengthening coupled with a higher bond yield. 

These are ingredients for the precipitation of stocks to fall. The condensation of these influences will lead to the 2-year Treasury yield rising faster than longer-dated maturity bonds, further causing a more profound yield curve inversion, boosting the odds of recession and a hard landing. 

🎲Seek a slower pace but unlikely to pivot🎢

The Fed is widely expected to raise interest rates by 0.75%. This will move the policy rate to a range of 3.75% to 4%. The economic projects and rate forecasts will shed light on whether the central banks are ready to slow the rate increase without a hint of any pivoting. 

Pika World expects an aggressive accumulation of riskier assets across different markets if it does come through. The Fed may hint at a higher-than-normal rate increase of 0.5% for the December meeting and allow the rate to stay elevated to restore price stability. 

Pika World stresses that a slower pace of tightening and a pause in the hike is not a pivot. The robust hiring in the labour market with ultra-low unemployment and high consumption is the bedrock of the inflation heat that will still require an extended period of monetary tightening conditions.

📮What’s on the menu today?📖

At 8.15 pm, we will have the crucial ADP Nonfarm Employment change figure, which we expect to reduce to 195K, not far from 208K in the prior period. 

Then the FOMC statement will come at 2 am, followed by the FOMC Press conference at 2.30 am. So, again, it is likely to be a market mover.