All Eyes on the Federal Reserve


Markets are still wild.

All as we wait for the Federal Reserve’s decision to hike interest rates by either 75bps or 100bps.  All in an effort to combat sky-high inflation, which hit 8.3% in August.

According to CNBC:

“In its continuing quest to tackle runaway inflation, the Fed likely will approve a 0.75 percentage point hike that will take its benchmark rate up to a target range of 3%-3.25%. That’s the highest the fed funds rate has been since early 2008. Markets are pricing in a slight chance for a full 1 percentage point increase, something the Fed has never done since it started using the fed funds rate as its primary policy tool in 1990.”

While a good deal of interest rate-induced fear has been priced in, many are now concerned about the forecast for future hikes.  By year end, economists believe the Fed may have to hike interest rates to more than 5% in the inflation fight.  Goldman Sachs says we could see a range of 4% to 4.25% by year end, with more hikes next year.

Let’s just hope that whatever happens today brings sanity – and clarity back to the market.

If the Fed induces further panic, investors can always jump into:

ProShares Ultra VIX Short-Term Futures ETF (UVXY) 

The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.

iPath S&P 500 VIX Short-Term Futures (VXX) 

The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index.

ProShares VIX Short-Term Futures ETF (VIXY)

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.