Sanrith Descartes
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Investing General Discussion
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Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!
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Jysin
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14:00 *(US) FOMC RAISES TARGET RANGE 25 BPS TO 0.25-0.50% (AS EXPECTED) (FIRST RATE HIKE SINCE DEC 2018); TO BEGIN CUTTING HOLDINGS OF TREASURY SECURITIES AND AGENCY DEBT AND AGENCY MORTGAGE BACKED SECURITIES AT A 'COMING MEETING'
- IOER raised to 0.40% v 0.40%e
- Vote was 8-1, Bullard dissented (sought 50bps increase)
- The Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities 'at a coming meeting'
- Ukraine war may create inflation pressure and slower growth
- Indicators of activity and hiring have continued to improve
- Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic
- Pencils in rate hikes at each of the six remaining meetings this year, with consensus funds rate of 1.9% by year’s end
- Source TradeTheNews.com
- IOER raised to 0.40% v 0.40%e
- Vote was 8-1, Bullard dissented (sought 50bps increase)
- The Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities 'at a coming meeting'
- Ukraine war may create inflation pressure and slower growth
- Indicators of activity and hiring have continued to improve
- Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic
- Pencils in rate hikes at each of the six remaining meetings this year, with consensus funds rate of 1.9% by year’s end
- Source TradeTheNews.com
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Jysin
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14:00 *(US) FOMC SUMMARY OF ECONOMIC PROJECTIONS (SEP) FOR MARCH
- Raises Median forecast for end-2022 rate 1.875% (prior 0.875%)
- Raises Median forecast for end-2023 rate 2.75% (prior 1.625%)
- Raises Median forecast for end-2024 rate 2.75% (prior 2.125%)
- Affirms Median forecast for Long Run rate 2.50% (prior 2.50%)
- Source TradeTheNews.com
- Raises Median forecast for end-2022 rate 1.875% (prior 0.875%)
- Raises Median forecast for end-2023 rate 2.75% (prior 1.625%)
- Raises Median forecast for end-2024 rate 2.75% (prior 2.125%)
- Affirms Median forecast for Long Run rate 2.50% (prior 2.50%)
- Source TradeTheNews.com
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Jysin
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**DOT PLOT SUMMARY: median forecast sees 7 hikes in 2022, 3-4 hikes in 2023 (prior: 3 hikes in 2022; 3 hikes in 2023) - Source TradeTheNews.com
Blazin
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I'd give it a little time to settle, fed days can be very trappy. SPY doesn't hold this level though it could drop to 423-4 range pretty fast.
I think the market is a little surprised that the FED agreed with them about 7 rate hikes. That was how it was priced but yet there was some expectation that the Fed wouldn't be ready to say that. I still am very skeptical that happens. I'm in the 3-4 camp for this year.
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Flobee
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I doubt they even make the second scheduled hike. US can't service its debt at higher rates, each 1/4 point is billions more in interest payments required. Unless they've got some brilliant scheme I can't see, this is just a token move that gets reversed once the markets start screaming for relief rather than flipping out over inflation.
Volcker had a lot more to work with than the Fed has now. Hard to see a path that doesn't lead to a default on US debt. Be it by a hard default or soft via inflation.
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Sanrith Descartes
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I trimmed 10% back around $147. The thing is it keeps putting out good news.
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Blazin
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Sanrith Descartes
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Sanrith Descartes
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Blazin
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We have an hour press conference to get through yet, all waiting for him to use the wrong/right adjective.Buying and selling on Fed days be like...
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Sanrith Descartes
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Flobee
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Fed determines monetary policy correct? QE is the buying of treasuries creating a price floor, thus unnaturally suppressing rates. I'm aware that's an oversimplification but I'm not sure that I agree that they follow rates. Perhaps I'm misunderstanding what you mean.
As a sidenote I think maybe we should have a separate thread for this kind of conversation. It doesn't quite fit here but I do think more macro focused conversations about how the economy and money more broadly work could be useful and interesting.
Sanrith Descartes
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Sanrith Descartes
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Algos quietly waiting for all the retail investors to finish selling because they thought the Fed would not raise rates because they watch CNBC...
Blazin
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I need to listen to Powell right now but this is the right place for it, There is no "think" about it, the fed follows rate go ahead and chart fed Funds rate vs 2yr treasury it's not an opinion.
It is also not always true that QE artificially lowers rates in any substantive way, what it does do is push money up the yield curve. The Fed doesn't even buy long term treasuries yet look at their yield. Just be careful in general if you want to wade into the world of having opinions on monetary policy that you are acting on. People love to make elementary level statements that show they don't really understand the markets they are talking about, even if there is some truths in the sentiment in general.
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