Fed's Trying to Calm Markets, & Sector's Pleased with Reporting

2 feb 2022

We already wrote that there is a competition among analysts and experts who will predict more rate hikes from the Fed in 2022. Some consensus is in the region of 3-4 increases. Although there are extreme cases like 7 promotions. In general, the markets thoroughly wound themselves up.

The Fed, seeing this, decided to reassure the public a little. This week, several central bank officials said at once that the Fed will not make any sudden moves, monetary tightening will be gradual and any new move will depend on economic data. As a result, we see a return of demand for risky assets, accompanied by a decrease in Treasuries yields and dollar weakness.

In general, the game continues. The markets were looking for an excuse to breathe, the Fed gave them this reason. In our opinion, this is the only way to perceive what is happening.

An additional reason for joy was the reporting of technology giants. Alphabet and AMD released quarterly results that were better than expected.

Alphabet, after 32% revenue growth and 65% share price growth over the past year, even announced a 20-to-1 stock split that will go into effect in July.

Last but not least, according to the Department of Labor, there were almost 11 million job openings in December, more than 4.6 million more than the overall unemployment rate. That is, demand in the US labor market significantly exceeds supply.