FOMC ~ Bearish Reaction
Bond Market Moves before Stocks
The reaction to FOMC interest rate decision saw yields on longer term bonds edge higher as opposed to the short end. This is a bear steepening and caution is needed.
Yes! bond market already hiked for the FED. Yields on the 2Y treasury sit at 4.3% and the FED’s target range is 3.5 - 3.75. If this correlation continues to hold as it has historicall, it means the FED has to hike in a few months time. More bearishness for stocks. 3 members dissented and opted to have a hike. This number will keep increasing.
YTD inflation is what 4.2%. While the monthly data was encouraging with a slight cool, there’s still no clear downward trend.
The Fed will hike interest rates in a few months unless monthly readings trend further downward.
Stocks especially ones burning a lot of cash, sold off aggressively and this will only continue because there’s we are soon going to see liquidity issues
