SPVM - Powell Takes A Stand: Reading Between The Lines Of Today's Surprising FOMC Meeting

2024-01-31 17:52:24 ET

Summary

• The Federal Reserve held interest rates steady and signaled that a March rate cut is unlikely, surprising market bulls.
• Taylor Rule modeling shows the Fed's stance is surprisingly hawkish. Stocks fell about 1.6% on the news.
• This potentially suggests concern from the Fed about inflating a stock market bubble or about being seen as trying to influence November's U.S. presidential election.
• The voting composition of the Fed has also changed, with more hawkish members rotating in for 2024.

At today's FOMC meeting, the Fed voted to hold interest rates steady and signaled that a March cut in interest rates is unlikely. Jerome Powell then delivered a fairly hawkish press conference. This yet again caught market bulls by surprise who had bet heavily on a quick Fed pivot to a low interest rate environment. Between the lines, several interesting stories are playing out at the same time that can give clues about what's going on with the Federal Reserve and the economy. But make no mistake, this Fed is surprisingly hawkish. The large cap S&P 500 ( SPY ) fell 1.6% today on the news....

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