The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
No policy changes.
Overnight was quiet. Premarket futures rallied just a little bit. The S&P 500 opened up about 5 points and caught a bid about 15 minutes later. The index rallied to +36 a little after 10:30 AM and gave back about half the gains as we waited for the FOMC decision. The policy rates weren’t changed. The dot-plot didn’t change. The statement barely changed and the edits suggested less bias to action. The robots shook things up a bit on the immediate release but the market stabilized thereafter as we waited for the press conference.
Fed days are always important and they require close attention although a lot of recent Fed days have been calm. That tells us more about the state of the world than the nature of the Fed. It just happens to be the case that the market and the Fed have *mostly* agreed for a while. The market and the Fed have also projected the path of economic growth and inflation *mostly* the same. Small differences that persisted, melted away with the passage of time and the arrival of data. This has resulted in a whole lot of *unsurprising* Fed days. Today was the latest example.
It won’t always be that way. At some point, something will happen that shocks the economy, the markets, and the aggregate outlook. When that happens, Fed days will be volatile and surprising events. Until that happens, enjoy the smooth sailing and recognize that this window of Fed balminess is a rarity.
Tomorrow is a market holiday and that leaves Friday’s session to conclude the week. I don’t think markets want to do much unless headlines force them to. Watch the news and if nothing jarring prints, anticipate a traditionally quiet summer Friday.
See you then.
-Mike
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