Should the FED wait for a financial accident to happen BEFORE cutting interest rates?
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‼️ Big Tech, Bonds, Bullion and Bitcoin fell sharply after the Fed cuts rates by 25 basis points - which is exactly what 97% of market participants expected. So what happened❓ 👉 Actually, today's market reaction had NOTHING to do with the rate decision. Rather, it would about the Fed's outlook for 2025 which shifted SHARPLY in the hawkish direction. 👉Indeed, the hashtag#Fed reduced their outlook from 3 to 2 rate cuts in 2025. 👉Furthermore, the Fed now sees hashtag#inflation at 2.1% at the end of 2026, still slightly above their 2.0% target. ⚠️ The stock market's decline accelerated after Powell said one specific sentence in his press conference today: "Today was a closer call but we decided it was the right call." ⚠️The US Dollar surged to its highest since November 2022 after he said that. Clearly, the Fed has acknowledged that inflation is an issue, once again. ⚠️On top of this, Cleveland Fed President Beth Hammack dissented in today's decision. 1 out of 19 Fed officials sees no rate cuts in 2025 and 3 officials see just 2 rate cuts. Only 5 Fed officials currently see 3 or more interest rate cuts in 2025 in a sudden hawkish shift. This led to what appears to have been the biggest panic sell in the market since the Yen carry trade collapsed. Small cap stocks fell nearly 5% today and the Dow posted a 10-day losing streak for the first time since 1974. Sentiment is shifting as we look into 2025.
He lived up to his reputation and track record yesterday. To say the least... Source: Bespoke
Last FOMC interest rate decision of 2024 is today at 2PM ET, followed by the usual press conference. A 25bps rate cut looks like a done deal. Key questions:1) Why is he cutting while stocks are ATH and Core CPI above 3% 43 months in a row= 2) Will it be a "hawkish cut" with significant upside revisions to growth and inflation forecasts + downward revision to the dot plot? Merry Christmas Mr Powell Source image: TrendSpider