Uppers [The Water Coolest]
Fed Chair Jay Powell and the FOMC announced plans to raise the federal funds rate by ¼ of a percent, partially because of a strong-ish (because, "data") economy and mostly because it was determined that the move was as close as Jerome could get to telling Donald Trump to go f*ck himself on live TV.
The Fed's path forward falls more into the “girls gone mild” category however, with just 11 of 17 Fed officials expecting greater than two rate hikes next year (vs. 16 of 17 just 3 months ago).
Powell’s quants revised a slew of economic figures including core inflation which they expect to end the year at 1.9% vs. 2.0%. His team also tamped down expectations for long term unemployment from 4.5% to 4.4%.
So why did markets implode?
What’s a Fed meeting without a group of classically trained finance sleuths (read: finance twitter) pouring over the Fed's version of mad libs? Markets did not like that "further gradual" rate hikes was replaced with "some" rate hikes in the Fed's post-meeting statement. There was hope that the language would indicate a more dovish approach.
Plus there was a fair share of pessimism associated with Jay's plans to continue the wind down of the Fed's thicc balance sheet. Traders feel this is a move that will "tighten" the economy.
Markets fell dramatically following the announcement and presser.
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