Urgent: Gold falls for fear and stocks fluctuate heavily.. Urgent: A storm of losses will sweep US stocks.

Urgent: Gold falls for fear and stocks fluctuate heavily.. data gives the Fed brute force

 It seems that the way is being paved for the Fed's decision, which may be the most violent in 40 years, as the unemployment data came to give the Fed additional strength that the economy is on the right track.

And just released data on the number of applications for unemployment benefits in the United States during the past week, coinciding with the release of retail sales, which provides evidence of the strength of the American economy.

With the beginning of Thursday's trading on Wall Street, the losses of the yellow metal widened sharply, while US stocks tended to record limited losses so far.

gold falls

The prices of the yellow metal fell during these moments in terms of XAU/USD - spot gold and US dollars to its lowest level since trading on July 21st.

On the other hand, futures contracts for the yellow metal fell at a greater pace, down to levels near 1689 dollars an ounce, with a decline within the limits of 15 dollars an ounce, or 1%, during these moments of trading today, Thursday.

The dollar is hovering near the peak

In contrast to gold's violent declines, the dollar index fluctuated during Thursday's trading, as it hovered near its highest level in more than 20 years, near levels of 110 points.

The dollar index is slightly declining during these moments by less than 0.1% at levels of 109.6 points, while the index recorded today the highest price at 109.92 points, compared to 109.42 points as the lowest price.

While the 10-year US bonds tended to extend their gains, which rose to their highest levels since 2011, reaching 3.46% in today's trading, an increase of 0.035 points.

Wall Street

The expectations of analysts and major banks are likely to increase the losses of US stocks in the coming days, 

The Dow Jones index rose during the moments of writing the report by 0.3%, or the equivalent of 90 points, after declining by the same percentage in the first minutes of trading today, Thursday, as it hovered near the levels of 31230 points.

Simultaneously, the trends of the broader Standard & Poor's 500 index and the Nasdaq technology stock index reversed after falling in the first minutes, with the first rising 0.2%, or 8 points, while the Nasdaq increased 0.25%, or 25 points.

Important data

The data showed that the value of total retail sales increased by 0.3% in August, while it was expected by 0.1%, after the revised reading for the month of July showed that sales decreased by 0.4%, while excluding gasoline, retail sales rose 0.8% during August.

The data of the US Department of Labor revealed that the number of initial jobless claims decreased by 5 thousand to 213,000 in the week ending on the tenth of this September, 

The billionaire founder of Bridgewater Associates LP added that simply increasing prices to about 4.5% would cause stock prices to fall by about 20%.

Urgent: A storm of losses will sweep US stocks... bleak expectations due to the Fed's hardening

With US stocks experiencing a violent wave of declines on the impact of disastrous inflation data, Ray Dalio, chief investment officer and founder of Bridgewater Association, believes that the risk of US stocks falling to their lowest levels in June is increasing as the Federal Reserve continues to tighten monetary policy aggressively

Inflation will not stop there

Dalio believes that inflation in the US for the next 10 years will be around 4.5%-5% in the long run, while some unexpected problems will cause it to rise "significantly". He notes that markets are currently pricing in 1% for the next 10 years.

"In the short term, I think inflation will ease a bit as past problems are resolved in some areas (such as energy) and then head up again towards 4.5% or 5% in the medium term," Dalio said in a LinkedIn post.

He added, “The higher the long-term inflation rate, the more actions the Fed will need to push it toward its long-term target of 2%. A rate hike to 4.5% could cause stocks to fall 20%.”

Dalio's comments align with recent comments by Greg Jensen, Bridgewater's chief investment officer.

He said, “Looking at the aggregate factors, we can say that the asset markets fell by 20% to 25%.”

surprise coming

With expectations emerging from time to time that the Fed will continue to tighten interest rates, Andrew Hollenhurst, Citi's chief US economist, believes that a 100 basis point rate hike at next week's Federal Open Market Committee meeting is "possible, but relatively unlikely".

In a note to clients, Hollenhurst said: “Another upside surprise to core inflation is altering the narrative of sluggish core inflation, and not only warrants a larger increase in pricing policy next week, but also makes it more difficult for Fed officials to justify the slower pace of increases in November and beyond. after him".

However, the economist leaves the door open for a 100bp rate hike as the Fed actually surprised the markets in June when it headed to 50bp, but raised the rate by 75bp.

“We suspect Powell and the committee are comfortable with tightening financial conditions after Jackson Hole and yesterday's inflation reading. Hollenhurst added that a hawkish message could be sent through press conference speech and higher 'scores' in the economic outlook summary, rather than the size of the larger rally."

Citi's chief US economist concluded that the pace of aggressive rate hikes will slow when the FOMC feels that an "idea of ​​restrictive policy" has been reached.

The Fed will be savage

On the flip side, Cathy Wood said during the company's monthly market webcast, picked up by Market Watch, "the bank will probably exaggerate it."

Wood made the comments amid investor concerns that the Federal Reserve will have to maintain its sharp pace of monetary tightening to combat high inflation.

Many investors fear that the central bank risks triggering a recession if it raises interest rates too quickly.

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