CA - Fed Meeting Preview: Unexpected Macro Data Likely To Alter Fedspeak

2024-04-26 11:29:19 ET

Summary

• Changes in Fedspeak are anticipated as the latest GDP print came in lower than expected while inflation has inched up. Interest rates are set to remain unchanged, however.
• While the sub-trend growth along with weaker consumer sentiment and company level sales data and forecasts indicates possible dovishness, the strong labor market supports a more balanced statement.
• From an investment perspective, Treasury-based ETFs and defensives like healthcare look good, while the broader index and consumer discretionary stocks are sectors to avoid.

The latest economic activity data shows that GDP in Q1 2024 grew at a smaller pace than expected. This is directly in contrast with a higher-than-anticipated inflation print, coupled with firm labor market trends. The question now is… where do these unexpected data developments leave the Fed as it readies for its FOMC meeting at the end of April?...

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