US Fed unlikely to move this year; equity markets at risk

The US Federal Reserve is unlikely to raise interest rate anytime this year, says Head of equity Strategy, Asia-Pacific at HSBC. The US Fed might look at raising rates by middle of next year. Markets, however, believes that the US Fed will raise rates sometime this year. 

 

The long yield bonds are expected to move higher as central banks adjust their balance sheets. The banks are not buying as much as markets had earlier anticipated, which will reflect in bonds. The Bank of Japan, which will also be meeting on Tuesday, seems to be quiet uncertain too. “We do not expect them to come out with any big bazooka or no significant increases in asset purchases,” Head of equity Strategy ,says. While Japan is on a path to recovery, they are still way below their inflation target. 

 

The equity market is at a risk despite the rally seen since March, adding that India is not an exception to that. A big move of volatility is expected in the next couple of months. In this, the downside risk to India will be low as compared to other markets like Thailand and Indonesia. 

 

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