US Interest Rate Hike Expectations Drop, Impacting Market Decisions
Translated & summarized from Al-Shams by baba
Local currency markets remain stable as expectations for a US interest rate hike have sharply declined from 70% to 20% for the upcoming meeting. Accountant Majd Karam explained that weak consumer demand is preventing companies from fully passing on rising supply chain costs to consumers. Market uncertainty, fueled by upcoming Israeli and US elections, is causing investors to postpone decisions. The Tel Aviv Stock Exchange opened positively, influenced by Wall Street's performance.
The story in 5 lines · by baba
- US interest rate hike expectations dropped from 70% to 20% for the upcoming meeting.
- Local currency markets are stable, with the dollar at over 3.05 shekels and the euro above 3.42 shekels.
- Weak consumer demand prevents companies from fully passing rising costs to consumers.
- Market uncertainty due to Israeli and US elections is causing investors to delay decisions.
- The Tel Aviv Stock Exchange opened positively, influenced by Wall Street's performance.
Local currency markets have stabilized, with the dollar trading at over 3.05 shekels and the euro above 3.42 shekels for over a week, according to accountant Majd Karam. Globally, the dollar index has settled around 102 points, near its highest level since April 2025, while the euro saw a slight rise after hitting a 17-month low. The most significant shift involves US interest rate expectations, with the probability of a hike at the upcoming meeting on the 28th plummeting from 70% to 20%. While a December hike is still priced in, doubts are emerging about that scenario as well. Karam warned that any unexpected rate increase could cause significant market volatility.
Despite rising supply chain and producer costs, consumer prices have not fully increased due to weak consumer demand, which limits companies' ability to pass on higher expenses. This indicates consumers' collective power to influence prices through demand levels, though significant change requires broader collective behavior. Karam linked market uncertainty to upcoming Israeli elections and US midterm elections, suggesting that investors are delaying decisions and avoiding risks until political paths become clearer.
Investors are inclined to hold onto funds during instability, awaiting political direction before making investment choices. While some analyses predict the shekel could strengthen to around 4 shekels per dollar, potentially benefiting Israeli investors, these are speculative. The Tel Aviv Stock Exchange opened positively, partly influenced by Wall Street's previous session, with markets awaiting further developments in the US.