Financial Market Research- Article Overview
The article “Fed must ‘inflict more losses’ on stock-market investors to tame inflation, say, former central banker,” is analyzed. Notably, this article sought to inform participants of the stock market in the U.S. that they are likely to incur losses in the efforts of the government aimed at taming inflation. According to Watts (2022), the article’s primary purpose was to inform stock and bond investors that they are likely to incur losses under the efforts of the U.S. Federal Reserve to get inflation under control. Three ideas are learned from the review of this article. First, altering fixed-rate mortgages can significantly influence the wealth of many Americans because a majority of them hold wealth in equity. Second, raising interest rates to curb inflation affects financial markets. Finally, the farewell of the nationwide economy comes before that of individual investors.
All of the three issues identified affect financial markets. Considering the first issue, the vast investments made by U.S. citizens in equity influence the liquidity of financial markets. Any attempt by the U.S. Federal Reserve to alter long-term, fixed-rate mortgages is sensitive to financial conditions in the market (Deev & Plíhal, 2022). If the rate is increased, the markets will be affected adversely. On the second issue, the stocks in U.S. financial markets lost ground in 2022 when the Federal Reserve signaled a plan to shrink its balance sheet and increase interest rates as a measure to curb inflation. As a result, stocks such as SPX on S&P fell by 7%, while COMP on Nasdaq fell by more than 11%. Finally, the government needs to control inflation rates. Consequently, the stock prices will be pushed lower while those of bonds will be pushed up. Notably, this will inflict losses on investors in financial markets.
Deev, O., & Plíhal, T. (2022). How do we calm down the markets? The effects of COVID-19 economic policy responses on financial market uncertainty. Research in international business and finance, 101613.
Watts, W. (2022). Fed must ‘inflict more losses’ on stock-market investors to tame inflation, says a former central banker. MarketWatch. https://www.marketwatch.com/story/fed-must-inflict-more-losses-on-stock-market-investors-to-tame-inflation-says-former-central-banker-11649258021
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Visit one of the websites or library databases below to find a finance article that interests you.
Yahoo! Finance (finance.yahoo.com)
Click on “Markets,” “Personal Finance,” or “Economy.”
Motley Fool (www.fool.com)
Click on any sections at the top or see the Trending section
Other credible financial sites
write a summary of your chosen article. Describe the main purpose of the article and three ideas or issues you learned about. Explain how each idea affects the financial markets.
This paper should have a professional tone and format. Be sure to use correct grammar and APA in-text citations and references to give credit to sources. Wikipedia is not a credible website and should not be used.
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