US markets have been having a rough time recently. The Dow Jones Industrial Average (DIA), S&P 500 (SPY) and Nasdaq (QQQ) have all been experiencing overall declines for months now. While I’d like to tell you that these declines are likely to be short lived, I refuse to lie to you. The reality is that the US market is headed for even more turmoil. The Federal Reserve has all the ammunition it needs to pull the trigger on interest rates and that will spell disaster for the market. So today, we’ll talk about why a Federal Reserve rate hike is likely to trigger more bearish activity in the market, why the Fed is likely to raise rates in October, and how binary options traders can take advantage of the trends that are soon to come.

Why Would A Federal Reserve Rate Hike Cause US Market Turmoil?

In reality, this question is relatively simple to answer. Just look back to why the Federal Reserve reduced the rate in the first place. It happened in the midst of the global financial crisis of 2008 and 2009 when just about every economy around the world was struggling. In order to stimulate the US economy, the Federal Reserve purchased bonds and reduced interest rates. Purchasing bonds put more emphasis on stocks and lower interest rates put more money back into the pockets of consumers. However, when this all happened we knew that it wouldn’t and couldn’t last forever. In fact, the bond purchasing program, known as quantitative easing is already long gone. The Fed put an end to that program in late 2014. However, low interest rates are still in effect, but not for long.

When the Federal Reserve does increase its interest rate, lenders will charge a higher premium for consumers to borrow money. So, when this happens, consumers will spend more money on interest, leaving less money available for spending on products and services. As a result, corporations are likely to feel the pain of lesser revenues; leading to declines in the market.

Why I Believe The Fed Will Increase Its Rate In October