Friends
The Fed’s FOMC statement did illicit a response from the both stocks and bonds, but in reality the Fed Chairman really didn’t indicate that the central bank’s monetary policy is going to change any time soon. Yes, the Fed did acknowledge that inflation is a current issue, but they still feel that the level of inflation that we are experiencing now will lessen over time. In terms of policy, we aren’t likely to see the Fed Funds rate increased for some time (the “dots indicated that 2 rate hikes are possible in 2023. That’s right 2023), but markets are more focused on asset purchases. Asset purchases will be reduced eventually, but the Fed Chair isn’t indicating that a reduction is not imminent.
As for stocks, after an initial drop things did recover some but by the close the Dow Jones Industrial Average was down 264 points to finish the day at 34,034. The S&P 500 was down 22 points to close at 4,223. The Nasdaq Composite Index was down 33 points to close at 14,039. Gold was down $23 to trade at $1,833 per ounce, while oil was down $.18 to trade at $71.94 per barrel WTI.
As mentioned, the bond market reacted also with rates on the 10 Year Treasury Note rising (prices falling) to a yield of about 1.58%. Going into the announcement the yield had hovered near 1.49%. So, it appears no matter what the Fed announced today or what the Fed Chairman said in his press conference, the markets were ready to react. Let’s see how it plays out over the next couple of trading days.
Have a nice evening everyone.
