Friends
As expected, the Fed did raise the Fed Funds rate a quarter of a point which now stands at 1.75% to 2%. The FOMC statement did indicate that they still see 2 more rate hikes this year and 3 next year. That would bring this year’s total to 4 rate hikes and not 3, so the statement is a little more hawkish from that standpoint. But in the press conference, Chairman Powell indicated that, as always, economic data going forward will dictate the pace at which future rate hikes will occur.
The markets were quiet going into the release, but stocks did give some ground after the release and into the close. Bonds really didn’t do much before or after the release as the 10 year note sits at about 2.97%. By the close, the Dow Jones Industrial Average was down 119 points to finish the day at 25,201. The S&P 500 was down 11 points to close at 2,775. Gold was up $4 to trade at $1,303 per ounce, while oil was up $.35 to trade at $66.71 per barrel WTI.
The Fed’s path seems pretty clear assuming the economy remains healthy. As the Chairman reiterated, they will adjust their path if necessary. What will be interesting to see is what happens on the long end of the yield curve. To date, as the Fed has continued to raise, the yield curve has continued to flatten. If the long end of the yield curve continues to hold firm, a potential inversion of the yield curve could be a challenge for the Fed down the road. But that’s a concern for another day.
Have a nice evening everyone.
