Markets Drop As The FED Reaffirms Higher For Longer Rates; Again…

Markets were disappointed yesterday, as the Federal Reserve held interest rates steady for a fourth straight meeting as expected but more importantly signaled the possibility of a rate cut, but later in the year and pretty much ditched the prospect of a reduction in March, which some optimistic economists were banking on.

As a result, Stocks saw their biggest decline on a Federal Reserve day since last March after Jerome Powell said officials want to keep their options open instead of rushing to cut interest rates.

“If stock bulls expected a rate cut in March, Powell seems to have closed the door on that,” said Oscar Munoz at TD Securities.

As a result, and other significant news, the S&P 500 fell 1.61%, the most since September while the Dow fell 0.82% and the NASDAQ slid 2.23%.

Treasuries rose as fresh concerns about regional lenders added to economic worries after New York Community Bancorp’s surprise loss which dragged their shares down by 38% after it cut its dividend and posted a surprise loss. As a result, Regional U.S. bank stocks sank on Wednesday, renewing fears over the health of similar lenders.

Interest rates took the elevator going up — but are going to take the stairs coming down.

Now we turn to the Bank of England, which will hold rates again today, and markets are not expecting a possible cut until later in the year – higher for longer, again!

http://www.martinnorth.com/

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Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Markets Drop As The FED Reaffirms Higher For Longer Rates; Again…
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Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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