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  • Scott Poore, AIF, AWMA, APMA

Fed Watch Week

All eyes will be on the Fed this week as market sentiment for future rate cuts is a moving target these days.

Currently, odds of the first Fed rate cut have moved lower and are close to a 50:50 probability in March between a 25 basis point cut or no cut. Markets got ahead of the curve based on the Fed's language in December and expectations have come down slightly. The Fed's comments this week after their meeting Wednesday may move markets if Chairman Powell is viewed as overly hawkish or overly dovish.


Meanwhile, on the economic front, the Fed's favorite inflation measure, the PCE Price Index, showed little change year-over-year (2.6%) and the month-over-month change was as expected (0.2%).

The economic backdrop continues to support equities as 4th quarter GDP came in higher than expected at +3.3%, brining the annualized nominal GDP figure for 2023 to +6.3%. The consumer is one reason for the strong number and December's measure of Personal Spending was higher than expected (+0.7% vs 0.4%). The housing numbers are also showing some life as Pending Home Sales (leading) and New Home Sales appear to have stabilized and are showing a promising uptrend. It's very early, but the Atlanta Fed's GDPNow estimate for the first quarter of 2024 is +3.0%, so while we expect some choppy trading ahead, the economy supports a bullish case for now.

 

Disclosures


The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.


Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.


Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.


Past Performance does not guarantee future results.

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