Markets Go Quiet as Traders Eye Fed’s Final Meeting of 2021
Markets trade in a calm manner as traders eye Fed’s final meeting of 2021 slated for Tuesday and Wednesday. Bitcoin near $50K.
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Principal Points
- Markets turn quiet early Monday morning as traders anticipate the Fed’s final meeting of 2021
- The Federal Reserve gathers Tuesday and Wednesday to discuss monetary policy shifts
What’s Moving in the Markets?
The wider financial markets opened first Monday deals on a quiet note as traders anticipated this week’s key event. The US Federal Reserve holds its two-day regular policy meeting on Dec. 14-15. In its final meeting of 2021, the central bank is set to discuss several major topics weighing on the economic outlook.
First, talks about a quicker pace of tapering, or reducing, monetary stimulus is expected. Presently, the Fed has set out to complete the full withdrawal of its $120 billion-a-month asset purchases by mid-2022.
Now, however, the bank might be prompted to unwind its support at a quicker pace in order to cool down the economy. If the Fed announces it will speed up the end of its asset-purchase program, financial markets could endure high volatility.
Further, another keenly-watched topic would be the prospects of raising interest rates. On that note, Fed Chairman Jerome Powell has said the bank intends to hike rates sometime in late 2022. This said any surprising announcement of an earlier rate hike could result in an elevated market reaction.
What’s the Big Picture for Traders?
In that context, stocks, currencies, and cryptocurrencies are floating fairly flat early Monday morning. Stocks futures, for example, were slightly higher today after investors reacted with increased buying to the November inflation report.
On that front, the consumer-price index showed the pace of inflation on an annual basis hit 6.8% for November. In other words, price growth saw its biggest 12-month jump in nearly four decades. An increase of that scale was last seen in June 1982.
As a result, the S&P500 pushed higher on Friday to reach a new all-time closing record. Not only that, but the blue-chip index rose 3.8% for the week. In addition, the tech-heavy Nasdaq Composite sprinted 3.6%. To top it off, the Dow Jones Industrial Average rallied 4% over the past week.
The gains came despite the inflation report as traders and investors decided to increase their risk appetite for equities across the board.
What to Watch in the Markets?
Heading into the week, asset classes from stocks to currencies, to crypto, are expected to see unusual volatility. As the key Fed meeting approaches, traders and investors will be looking for opportunities to enter the market.
To this end, cryptocurrency trading has been relatively calm in the early hours of today’s session. Bitcoin, the original cryptocurrency, is presently hovering slightly below $50,000 per token. Moreover, the flagship digital asset saw positive momentum over the weekend as price gained about 8%.
On Saturday, bitcoin’s price slipped to a low of $46,700. Buyers, however, were quick to scoop up the orange coin and lifted its price to a session high of $50,750.
Ether, the second-largest token in the market, also enjoyed a winning weekend. The Ethereum token rose about 8.5% over the past couple of days to reach a level near $4,200.
Against this backdrop, the broader crypto market is fairly flat today as traders await fresh news to increase volatility.
Economic Data Coming Up (EST times)
There is no major news scheduled for today and market participants could use the time to reassess the current situation and opportunities ahead.
Besides the Fed’s final meeting of 2021, the market will be watching inflation data from the UK and Canada on Wednesday. Also, the Bank of England will decide on its interest rates on Thursday. On the same day, the European Central Bank will hold a press conference.