Since the last FOMC meeting, on Jan 29th, a lot has changed…
From an economic perspective, growth expectations have plunged and inflation prints have been wildly noisy…
Source: Bloomberg
… (especially the idiotically partisan UMich inflation expectations)…
Source: Bloomberg
Gold has been the dramatic winner since the last FOMC meeting while oil and stocks have been clubbed like a baby seal. Bonds are bid but the dollar has been dumped…
Source: Bloomberg
Interestingly, as stocks have tumbled in the last two weeks, so have rate-cut expectations, back more in line with where they were after the last FOMC meeting (just 56bps now, from almost 100bps two weeks ago!)…
Source: Bloomberg
On the bright side, mortgage rates have plunged since the last FOMC meeting…
Source: Bloomberg
Finally, before everything goes just a little bit turbo, we note that the market is currently significantly more dovish than The Fed’s dots this year and dramatically more hawkish in 2027…
Source: Bloomberg
Rates are expected to be a nothingburger today.
So will today’s fresh Dot-Plot adjust to the market?
More importantly, what will The Fed do about its QT program?
Key Headlines:
As expected, no change in rates:
- *FED HOLDS BENCHMARK RATE IN 4.25%-4.50% TARGET RANGE
But, the economic projections are not pretty:
-
*FED SHARPLY REDUCES 2025 GROWTH PROJECTION, MARKS UP INFLATION
-
Fed cuts year-end GDP forecast from 2.1% to 1.7%
-
Fed raises year-end core PCE forecast from 2.5% to 2.8%
-
Fed raises year-end unemployment forecast from 4.3% to 4.4%
Perhaps of most note:
Fed removes language that “risks to inflation and employment are roughly in balance”
Trump’s fault:
- *FED SAYS UNCERTAINTY AROUND ECONOMIC OUTLOOK HAS INCREASED
And finally, the QT Taper is on…
- *FED TO SLOW BALANCE-SHEET RUNOFF STARTING APRIL 1
Read the full redline of the FOMC statement below:
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