FOR WEDNESDAY: (3/21) Trade waiting on FOMC. Here’s what key analysts think:
The question then is whether the Fed will hike rates 3 or 4 times in 2018 and 2 or 3 times in 2019. Here opinions differ, and as Morgan Stanley writes, based on our stress-testing of the dot plot, it is possible to get to a full median of 4 hikes in 2018, particularly if the Chair moves, “but we think it is too early in the year for the FOMC to agree more tightening is needed, particularly in light of continued uncertainty about just how much tightening the first full year of balance sheet shrinkage will deliver. Also, having over-promised and under-delivered on rate hikes in 2015 and 2016, we think the FOMC will be reluctant to raise the median path too aggressively early this year and risk a repeat scenario—at least at this meeting.”
OVERALL: Anxiety cycles are increasing into the Easter Holiday and may continue thereafter for a few weeks until tax day so it’s hard to find many cycles that would allow a stronger recovery over the next month. The best cycles for a strong bounce could come from Wednesday into Friday but it would take a dovish FED doing 3 rate hikes and not 4, Trump backing off on China, and a magical budget coming together. That seems too much to ask.
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