The FED Postponed the Party in Markets

We started the day with great vibes as the CPI data from the U.S. came better than expectations. As a result, the markets turned green with up to 20% daily gains in a very short time until the FOMC statements and the speech by the chair, Powell.

During his speech, Powell had a hawkish stance by emphasizing the necessity of hitting 2% yearly inflation rate to be able to lower the interest rates from the current levels. He, several times, admitted that the data is getting better but the pace is not satisfactory for them.

Dot Plot Turned Hawkish

We had 3 interest rate cuts expected in the FOMC statements in May. However, the members of the FED decided to drop the number of interest rate cuts from 3 to 1 for this year.

This has dropped like a bomb in the markets because we started the year with expectations reaching up to 5 - 6 cuts within a year.

The over - positivity and the spoiled sentiment in the markets definitely hint that the bull market needs to wait at least 3 more months this year.

FOMC statements have always been in the same vein but the market did not want to believe that the FED members would be very strict with their plan to hit 2% as soon as possible because hard landing is still a fact that can hit the global economies.

When we put all things together, there are some clear messages to the investors:

• Wait for the next bull run; it may take longer than expected
• Watch the data closely and do not get hopium every time
• Not all interest rate cuts are great; the reason of the cut is more important

If we see an interest rate cut due to the fear of a hard landing, then it will destroy the markets more!

The cuts have to come with some positive messages and slight improvements in the global economies. Otherwise, the next episode might be more chaotic 🤣

What do you think about the FED meeting and the FOMC statements?

Share your thoughts below 👇

Hive On ✌️

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