It appears that the stock market is poised to open steady or slightly higher in the pre-market. The market is currently evaluating the Federal Reserve’s statements, with inflation and jobs remaining major concerns.
Despite this, reports of layoffs and the increasing costs of interest rates for everyday people are emerging. However, the effects of these factors on the economy will take some time to become apparent. The market is expressing the need to slow down, as there is a risk of overshooting the economy’s soft landing. The Federal Reserve could potentially push the economy into a recession by overdoing its actions.
Investors are wondering whether the Federal Reserve will change its course. Jay Powell’s recent statements indicate no, but there is still some uncertainty. The stock market is attempting to comprehend the implications of these statements.
Overall, there will be a period of uncertainty in the coming month until new data emerges. The bond market is currently of the opinion that rate hikes are no longer necessary, but the Federal Reserve has stated that it will rely on data to make its decisions. If consumer goods prices continue to rise, and the job market remains strong, the terminal federal funds rate could easily exceed 5.25%. In 2022, the Federal Reserve predicted a terminal rate of 4.6%, while the current terminal rate is between 4.75% and 5.00%. The Federal Reserve will not halt its actions if inflation continues to be a concern.
More to come tomorrow.
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