Fed Warns “Soon To Be Appropriate” To Raise Rates, QE Ends In March
Since the last FOMC meeting, on December 15th, Gold is the lone asset-class that is higher while bonds and stocks have been monkey-hammered and the dollar is weaker…
All US equity markets are lower since the last Fed meeting with Tech/hyper-growth hammered and all the bubble-markets blowing up.
Financial Conditions have tightened significantly since the last Fed meeting (after easing dramatically into the Santa Claus rally)…
Rate-hike expectations have soared since the last Fed meeting too with March now fully priced-in and more than 4 hikes priced in by year-end. The last few days of market weakness prompted a dovish drop in rate-hike odds, but the last two days have seen it shift hawkishly once again…
And before we get to The Fed’s decision, there is also this chart to consider… President Biden’s approval rating has crashed below that of Trump’s…
We suspect the politicians will learn that lack of jobs is way worse for being reelected than inflation… and indirectly pressure The Fed (if they haven’t already) to walk-back the QT and rate-hike trajectory plans… at least until after November maybe.
So what did The Fed say/do…
The market is pricing-in liftoff in March (followed immediately by QT) and four rate-hikes by year-end (just like The Fed’s “Dots”) – did Powell and his pals jawbone any of that hawkishly or dovishly today?
In a word: NO.
The Fed says it “will soon be appropriate” to raise funds rate.
The Fed says asset-purchases will end in March…
And The Fed says that balance-sheet-shrinking (QT) will start after rate-hikes commence.
Arguably the Fed was ‘dovish’ because it did not bring forward the end of QE or explicitly name a time for QT.
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Of course, we know what the stock market will do… at least to start with anyway…
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Read the full redline below: