Following the ECB, all eyes are on the Fed's upcoming interest rate decision, and the US central bank is anticipated to hold rates steady.
Our proprietary tool now indicates a near-certainty of the Fed refraining from rate hikes in tomorrow's decision.
Powell's forthcoming remarks on interest rates will be key for investors, shaping investment strategies going forward.
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- Interest Rates: The Federal Reserve is expected to maintain interest rates at the highest level in 23 years, ranging between 5.25% and 5.5%. This aims to control inflation, but investors hope for a swift rate cut. Inflation has retreated from its peak in 2022 but remains above the Fed's 2% target.
- Dot Plot and Projections: Powell will present the dot plot during the press conference, illustrating interest rate projections until 2026.
- Balancing Decisions: Powell must balance a gradually slowing labor market with a robust consumption trend.
- US United States 2-Year Yields: A rise suggests market impatience for a prolonged period of higher rates.
- EUR/USD: A more accommodative outlook and potential rate cuts could weaken the US dollar.
- Small Cap Stocks: A spike in the Russell 2000 may indicate expectations of a rate cut.
After the ECB's decision, the Fed is also expected to leave interest rates unchanged, barring any surprises.
The likelihood of the Fed halting rate hikes is now nearly certain in tomorrow's decision, with our proprietary tool indicating a 100% probability (up from 98% the previous week).
Here's What to Expect From Powell
Investors and analysts will closely monitor Powell's remarks to gauge the Fed's future actions and their impact on global markets.
Monetary policy decisions and rate projections will significantly influence future trading strategies and economic outlooks.
Regarding asset classes and portfolios, here's what different asset classes could indicate about what Powell might say:
However, it's important not to assume anything, as Fed rate cuts in 2024 are not guaranteed.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.