ASX 200 Futs are pointing up 49 pts and today is also MAR24 Share and Index option expiry so expect some price movement.
The FOMC dropped its dot-plot and it was unequivocally more hawkish than the Dec dots with 2024 flat at 3 cuts (though more voters moved towards only 50bps), but 2025 and beyond saw rate-cuts erased from the projections...
Source: Bloomberg
Then Powell stepped up to the lectern and dropped the dovish mic on any hawkish interpretation of the dots.
Powell reiterated his long-held view that the dot-plot does not amount to a "plan".
Powell calls the longer run interest rate change "pretty modest".
“I don’t think we know that,” Powell says about whether this will be a lasting trend.
However, Powell did admit rates are unlikely to be going ZIRP anytime soon:
“I don’t see rates going back down to that level but I think there’s tremendous uncertainty on that.”
If the Fed eases too much or too soon, he says, we could see inflation come back.
And if we ease too late, we could do unnecessary harm to employment.
“We want to be careful,” Powell says, stressing that "the risks are really two-sided here."
Powell signaled balance sheet reduction will slow (less QT >> more QE):
“We did not make any decisions today. The general sense of the committee is that it’ll be appropriate to slow the pace of runoff fairly soon, consistent with the plans we previously issued.”
Powell also rather dismissed the recent jump in inflation:
“There’s reason to think that there could be seasonal effects there,” Powell says about the January CPI and PCE figures, and then says that February PCE wasn’t “terribly high.”
So, wait, the seasonally-adjusted data is showing seasonal affects now?
In the end, the odds of a rate-cut in June jumped to 67%...And Powell's dovish dance sent assets to the moon as the USD dollar dived...
Which sent the old relic Gold to record highs while Bitcoin broke back over USD$67,000 which is very courageous after a record net outflow from BTC ETFs yesterday...
Source: Bloomberg
So Stocks soared higher - new record highs for the S&P, Dow, and Nasdaq - with Small Caps exploding to one of the best day of the year so far...
Source: MarketWatch
Not long now until we see Dow 40,000!
Which is funny because stocks didn't give a rats about rate-cut expectations anyway...
Source: Bloomberg
and of course, like clockwork MAG7 stocks soared to a new higher record high...
Finally, is this what The Fed fears? Inflation 2024 vs inflation of 1984???
Source: Bloomberg
Or is a Biden loss a bigger worry?
Source: Bloomberg
They tried to jawbone the big pivot/easing of rate-cut expectations and it showed no impact on Biden's approval rating, So what next? Massive QE?
Happy Thursday!
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