which thermometer for the financial market?

Interest Rates, the Fed and the US Labor Market: Important Data and Indicators for Brazilian Small Investors | Photo: Pixabay

The decision of the American central bank, Federal Reserve (Fed), made public on the 28th last, to maintain the expansionary policy of the United States and, for the moment, not to raise interest rates signals the repeated bet of the Bank Chairman Jerome Powell inflationary pressure is temporary and therefore there is no rush to start cutting monetary stimuli and letting the economy run on its two legs. Interest on Fed Funds remains between 0% and 0.25%.

The speech, along with the US giants’ second quarter balance sheet results (above market expectations), contributed to the good mood of global stock markets – which already expected this bias to maintain policy. The novelty was the signal for the reduction in asset purchases, which should last until the end of this year; the rise in interest rates should be longer.

This is mainly due to levels of job creation that are still not ideal – there are about 7 million fewer vacancies than in the pre-pandemic period – and price stability, both. closely watched by the Fed. The banking These two factors are set to improve, but uncertainties like a new outbreak of the Delta variant of the coronavirus, for example, are helping to leave the economy still on alert, without a solid foundation.

Also on Uncle Sam’s land, another important data for the global financial market was the US second quarter GDP result, released last Thursday (29). Despite an increase of 1.6% from the first three months of 2021 (back to pre-pandemic levels), the number was lower than market expectations. The data, less positive than expected, was driven by obstacles faced by retailers due to supply chain disruptions and challenges in the job market, among other reasons.

And why are these data and indicators important for the small Brazilian investor? If we are going to answer in a simplistic way, it is because it impacts and brings volatility on the world markets. In Brazil, in particular, we can say that the US numbers are affecting the daily exchange rate and, with inflation already under pressure, this could be another catalyst in the short term. However, with the publication of the Focus Bulletin of the Central Bank of Brazil on Monday (2), which already suggests an IPCA of 6.79%, initially, we will hardly have any big surprises by the end of the day. end of the year.

Therefore, it is important to stay in line with what I have touched in recent months, emphasizing the importance of a well-diversified portfolio with foreign assets / stocks inserted, so that no investor, even the smallest , don’t be surprised by this fact. and can benefit from a possible increase in US interest rates to come.

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