The US Fed held rate unchanged at 4.5% as expected, but made a change in its FOMC presser:
At the press conference, the tone of the Fed Chair did not solidify the change in the press release of “Inflation remaining somewhat elevated,” but rather a case of staying neutral until new information informs the Fed as to whether to stay hawkish or dovish.
Notably, other Central Banks are now cutting rates, as Bank of Canada cut rates by 25bps from 3.25% to 3.0%, and it does seem the ECB might follow suit, while the Fed keep rates at current level pending any change in the macro data on inflation and growth front.
There is now a mixed expectation on whether the Fed cuts rate in March, however there seem to be increasing confidence of additional rate cuts into June, a bit dovish if you ask me.
Treasury yields rallied on the presser, but retraced during the press conference. Yields are now relatively below where we started the month of January at, this is a relatively subtle level to enable equities rally.
I think the S&P gain grounds from here:
We have key macro events on the economic calendar on Growth and Inflation:
If, Advance GDP q/q comes in-line with market expectations or slightly above I think that is bullish at least for today’s session.
The key event is on Friday, we need Core PCE to print in line with expectation or below for market to price in the neutral/dovish stance of the Fed. If Core PCE accelerates, this could spark a bearish price action leading into the close of the week. It is also important to note that we do not have any FOMC meeting in February, hence there is a lot of room for data gathering and assessment.
I primarily will be focused on longs on IWM 0.00%↑ or Russell2k:
I am not sure about going long the S&P or NASDAQ itself, so I will stick to specific equity names for long.