Tackle Today: The Fed Comes in Two Waves Today

«Get the Popcorn Ready!»

Coach Mark here. I am a Fed geek as part of a macro geek overall personality. I love studying and following politics, economic reports, monetary policy, and the whole gambit of news and intrigue surrounding these topics. Others may have reality TV to entertain them…I have macro-TV.

Oh, and there is whole market reaction function to throw in there in response to all this data as well! Part of the macro game is understanding what the data means. The other part is attempting to determine what the markets (equities, currency, commodities, bonds) reaction to the data will be. Will they view it as positive, as negative, as nothing…it can be a difficult game but it is the biggest game in the world and one I enjoy very much.

So today is Fed day…and an interesting one at that. How will the Fed react to recent inflationary data and rising commodity prices? Their reaction comes in two waves today. The first wave is the release of the policy statement and Dot Plot at 2:00 PM EST. The previous Dot Plot showed three interest rate cuts this year. While most expect this to be the case, if it only shows two then this would be a signal that the Fed is concerned about recent inflationary data and does not anticipate cutting as often this year.

The next wave is the press conference by Jay Powell starting at approximately 2:30 PM EST. What tone will Jay Powell have at the press conference? What information will he provide. It is so very common for the initial reaction coming off the 2:00 PM EST policy statement to be one thing (bullish or bearish) and then for price to reverse course during the Powell press conference. I have a really hard time based on what Powell has said in recent months doing anything radical today but that is why we tune in.

A macro geek like myself loves days like today. Oh and the trading geek in me has a bunch of things lined up in this afternoon and the coming days assuming “The Wrath of Powell” doesn’t manifest itself. We will break down the whole day tomorrow and the coming days in programming.

Have a fantastic Fed day!!!

 



U.S. Dollar ($DXY)

Currencies tend to tell the truth and a strong move up for the dollar today would be good for…well, it wouldn’t be good for just about anything.

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