Markets on edge: Fear in the markets and expectations towards the Fed

The Fear & Greed Index, which measures investor sentiment, has dropped to a level of 26, which is a clear signal of fear in the market. This decrease compared to last week's index of 32. Such a result often indicates increased uncertainty among investors, which can lead to greater fluctuations in the markets. The current fear may be related to expectations regarding future Fed decisions and global economic tensions.

The current interest rate maintained by the Federal Reserve is 3.50-3.75%. The next FOMC meeting is scheduled for July 29, 2026. Current expectations indicate a 65.8% chance of maintaining the rate at the current level, while 34.2% of investors anticipate an increase to 3.75-4.00%. The lack of expectations for a rise above 4.00% suggests that markets do not expect aggressive actions from the Fed, which may influence the stabilization of sentiments in the near future.

IFO data regarding the German economy showed mixed results. The IFO expectations were 84.1, slightly below the forecast of 84.8, but increased compared to the previous 83.8. Meanwhile, the IFO current conditions reached 87.0, exceeding the forecasted 86.3 and the previous 86.1. These mixed results suggest that the German economy is still facing challenges, but at the same time indicate some signs of improvement in current economic conditions.

In Australia, inflation data was mixed. The annual Trimmed Mean CPI rate was 3.6%, exceeding forecasts of 3.5% and the previous 3.4%, which may signal inflationary pressure. However, the overall CPI inflation rate without seasonal adjustments stood at 4%, which is below the expected 4.3% and the same level as before. This situation may indicate some price stabilization, although continuous monitoring is advisable to understand the future direction of monetary policy in Australia.

Sales in Japanese retail chains increased by 3% year-on-year, which is a significant improvement compared to the 1% growth recorded earlier. Although there were no available forecasts, such data may indicate a revival in consumption in Japan, which is a positive signal for the local economy. This could also influence expectations regarding the monetary policy of the Bank of Japan, which might consider adjusting its strategies in response to the increase in consumer activity.

Tomorrow will bring further analysis of market reactions to today's macroeconomic data. Investors will particularly watch for any new information regarding Fed monetary policy and further economic signals from key global economies. It will also be important to monitor changes in the Fear & Greed Index, which may influence short-term investment strategies.