A summary of institutions' views on financial markets on June 14

On June 14, institutions summarized their views on the stock market, commodities, foreign exchange, economic prospects, and central bank policy prospects:



1. Societe Generale: The market is worried that the Fed has to speed up the tightening of monetary policy, which is good for the dollar;
Societe Generale chief foreign exchange strategist Kit Juckes said that in general, the market is worried that energy prices are positive for the dollar, that the Fed may have to tighten monetary policy faster (good for the dollar), and that bond spreads in peripheral countries in Europe are widening.

2. JPMorgan: The Fed will raise interest rates by 75 basis points this week, the real surprise is 100 basis points;
First, the surprising rise in longer-term inflation expectations in the University of Michigan Consumer Confidence Survey could mean a rise in the level of nominal neutral interest rates. Second, according to a Wall Street Journal report this afternoon, the Fed will not be bound by their previous guidance that a 50 basis point rate hike "may be appropriate" at its two-day meeting tomorrow. The report said that Fed members were considering "stunning the market with a higher-than-expected 75 basis point rate hike", which helped to strengthen the market's expectations for the move. So one might wonder if the real surprise would be a 100 basis point hike, which we think is not a small risk.

3. Ed Moya, senior market analyst at Oanda: There is a view that the market is functioning normally, the credit market has no problems, and the Fed will not change its policy in the short term. It now appears that rate hikes may be larger than expected, and the market is racing to digest more aggressive tightening by the Fed, which is bad news for gold. Aggressive Fed policy may continue into September, or even the rest of the year. Gold will still face selling pressure, $1,800/oz may not be able to hold, then $1,750/oz is expected to become attractive

4. Bank of America looks ahead to the Fed’s interest rate decision: it is expected to raise interest rates by 50 basis points and reduce economic expectations;
Raising inflation expectations Bank of America analysts said in a note ahead of Wednesday's FOMC meeting that the Fed is likely to stick to the 50 basis-point stance that Fed officials have signaled since their last meeting, but given the recent unexpected rise in inflation and inflation expectations , Fed Chairman Powell will find it difficult to reject the Fed's more aggressive rate hike route, and the meeting will also update the dot plot. We expect this year's dot plot value to rise to 2.50-2.75%, and expect some growth forecasts to be revised down and some inflation expectations raised

5. KfW looks ahead to the Fed's interest rate decision: 50 basis points of interest rate hikes in June and July seem to be a foregone conclusion;
A 50 basis point hike in key interest rates at the upcoming Fed meetings in June and July appears to be a foregone conclusion, and the pace of monetary policy tightening will continue, said Fritzi Koehler-Geib, chief economist at KfW. The Fed has already begun to cut its balance sheet by $8.5 trillion, and the cuts will total about $1.0 trillion this year, with a further $1.5 trillion expected in 2023. Fed's balancing act is to slow price increases by raising rates without unduly constraining the economy

6. IDC: It is estimated that the scale of China's Internet of Things market in 2026 will be close to 300 billion US dollars;
IDC recently released the 2022 V1 edition of IDC's Worldwide IoT Spending Guide. According to IDC's latest forecast data, the global Internet of Things (enterprise) spending will reach US$690.26 billion in 2021 and is expected to reach US$1.1 trillion in 2026, with a five-year (2022-2026) compound growth rate (CAGR) of 10.7%. Among them, the size of China's enterprise-level market will reach 294 billion US dollars in 2026, with a compound growth rate (CAGR) of 13.2%. The global share is about 25.7%, continuing to maintain the world's largest IoT market volume

7. Standard Chartered Bank's forward-looking Fed interest rate decision: the benchmark for expected interest rate hikes in June is 50 basis points;
Standard Chartered strategists Steve Englander and John Davies said in a note that signs of a slowdown in the U.S. economy are not enough to prevent the Fed from raising interest rates further. They said the Fed is expected to raise rates by 50 basis points in June, July and September, before turning to smaller rate hikes as signs of an economic slowdown intensify. Standard Chartered Bank did not rule out the possibility of raising interest rates by 75 basis points at the meeting on Wednesday, and even expected a very small possibility of raising interest rates by 100 basis points. The Fed, however, doesn't like to create "surprises" and the drop in consumer confidence is astounding, so 50 basis points is reserved as the benchmark for rate hikes in June

8. ING: The dollar is expected to remain strong after the Fed’s interest rate decision;
The prospect of sharp interest rate hikes by the Federal Reserve and market volatility prompting investors to turn to safe-haven assets has proven to be an ideal combination for a stronger dollar. Given how quickly risk assets have fallen over the past few sessions, there could be some rebound in risk assets over the next few days, and the dollar could soon face a pullback, but at the same time, we think Wednesday's FOMC rate statement will largely support the dollar. The Fed is likely to raise interest rates by 50 basis points on Wednesday and raise interest rate guidance. The U.S. dollar index DXY was up 0.26% at 104.73 after hitting a one-month high of 104.82

9. UK regulators put Credit Suisse on a watch list concerned that it has not adequately addressed a high-risk culture;
Britain's financial regulator, concerned that a high-risk culture has not been adequately addressed, has placed Credit Suisse on a watch list, as the group has been slow to fully emerge from a string of earlier scandals and turmoil. Britain's Financial Conduct Authority (FCA) told Credit Suisse last month that it added its UK operations and international units to a list of companies to be closely watched after a series of scandals, according to a person familiar with the matter. The Authority cited concerns about its risk controls, governance and culture

10. CNBC financial celebrity Jim Cramer: The Fed now needs to raise interest rates by 100 basis points;
CNBC's Jim Cramer called on the Fed to raise rates by 100 basis points instead of the 50 basis points the market was expecting. Cramer said that while Powell is trying to exercise restraint on raising rates, "restraint is no longer the answer." He added that everyone needs to accept the fact that there will be some kind of recession in the economy. Cramer sees a market rally if Powell does follow through with a 100 basis point hike

11. Morgan Stanley: Weak consumption threatens stocks;
Low consumer confidence is a key risk to U.S. stocks and the economy as the Federal Reserve continues to raise interest rates to stem a spike in inflation, Morgan Stanley strategists said. Strategists led by Michael Wilson said that from a demand perspective, deteriorating consumer sentiment, coupled with CPI data keeping the Fed on a hawkish stance on inflation, would pose risks to the economy and stocks. Analysts say equity risk premiums do not reflect risks to economic growth. Risks to economic growth are increasing as demand weakens amid pressure on margins and consumers decide to spend less

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