Fed Rate Hike :

    Fed Rate Hike Probability can be watched from this url https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html (This is correctly predicted from 2009)

Fed Rate vs Core CPI vs Regular CPI graph can be seen here

   Step 1: Go to https://fred.stlouisfed.org/graph/?g=rocU#0    Step 2: Edit Graph -> Add Line -> Search for "Federal Funds Effective Rate" and click "Add Data Series"    Step 3: Select Units to "Percent" and look for the duration between 1986 to current

It looks like this

Till What Fed Rate Hike will happen :

   i)Fed Rate Hike won't reduce until Fed Rate is higher than Core CPI & Regular CPI in this chart    ii)Till Inflation is <2%

Inverted Yield Curve:

   In bond Market , bonds which are for 1 month,2 month are providing more interest than the 10 year,5 year bonds

Fed Rate Expectations :

   5.6 at the end of 2023    4.6 at the end of 2024    3.6 at the end of 2025

How Fed Hike controls Inflation rate :

   i)Home buyers Needed to pay more interest(For Variable pay interest) , so they will spend less on Other expenses (like food & gas) -> Core Inflation will come down    ii)Home buyers who have fixed Pay interest like in US, they don't have direct impact whereas they do have indirect impact.Due to new interest rate hikes, New Home buyers won't be likely to buy a new house, so house prices come down, so already brought persons might feel poorer and will spend less on Other Expenses(like food & gas) -> Core Inflation will come down    ii)Business Needed to pay more interest , so they will try to take less loan ->So they will fire employees or hire less employees and less bonus -> Job scarcity -> People joining companies with low wages than earlier -> Wage & Employment rate will come down -> Core Inflation will come down

Fed Main General Priorities:

   i)Maximize employment    ii)Keep prices stable

Fed Meeting :

Agenda:     i)Strong Job market and stable prices     ii)Unemployment rate Should be low     iii)Strong wage gains     iv)Inflation rate expected in US around 2%     v)US Economy growth         a)Growth in China and Europe has impact on it - Even incoming economic data is solid, but surveys on business & consumer sentiments have weaken         b)Reduction in Oil Price will lead to headline inflation lower still

i)Survey based on inflation ii)Financial data based on inflation compensation iii)balance risk of financial imbalance is lower iv)balance sheet normalization -

MOM of Jan 2019 : i) Important Historical facts about Federal Interest Rate:     i)Federal Interest rate increase was there in Year 2000 which was Presidential election year

Bond and relationship to Fed rate hike:

     i)10-yr Bond is sold by US govt at a fixed interest rate. Interest rate provided by bonds are called as yields      ii)These bonds can be resold in bond market.      iii)Fed interest rate(Short-term interest rate) vs Bond-yield (Long-term interest rate).Even when Fed interest rate is 0%, Bond yield rate was provided at 2.5% from 2009 to 2017 Lets assume old bonds are bought from US govt for $1000 at fixed 4% yield which will provide $40/yearly

**When Fed interest rate increases :**      -> Newly issued bonds receive higher yield(Ex:5%) , whereas old issued bond comparitively receive lesser yield(4%),      ->So inorder to match the old bond yield with new one , Market will downgrade the price of old bond (Ex:from $1000 to $800),     ->so now as we get $40/yearly and with the old bond trade purchase price of $800(instead of original $1000)which is almost 5% similar to what is received in newer bonds

**When Fed interest rate decreases :**   -> Newly issued bonds receive lower yield(Ex:3%) , whereas old issued bond comparitively receive higher yield(4%),   ->So inorder to match the old bond yield with new one , Market will upgrade the price of old bond (Ex:from $1000 to $1333),   ->so now as we get $40/yearly and with the old bond trade purchase price of $1300(instead of original $1000)which is almost 3% similar to what is received in newer bonds

So based on the above 2 scenarios, Bond Prices are inversely proportional to Yield

Stock Prices and relationship to Fed rate hike:

-> When Consumer Spending is high(Consumer confidence is high - Economy is good) -> Inflation is high -> Fed Interest rate is increased -> Bond Yield is increased -> As when economy is good yield prices are increasing , as market is in favorable conditions investors invest in stock's for a better return than yields ,so inturn stock prices are also increasing

Impact of Fed interest rate to Stock Market:

**Interest rate goes high :**    i)Companies which are giving offers to acquire Users will go down, so their revenue & share price will go down **Interest rate goes low :**    i)Companies which are giving offers to acquire Users will go up, as its like free cash