2023-05-03 16:37:06
An important FOMC meeting coming up today (5 hrs) .
The FED has a tough decision to make as they need to :
- further tame inflation by raising interest rates by another 25bps
- consequently, an increase in interest rates will put more pressure on U.S banks , likely leading to more defaults .
Our take : we can expect the FED to hike interest rates by 25bps regardless , however , there’s a decent chance that they’ll mention an end to this hiking cycle (contraction) .
This would likely result in some huge volatility in the market .
Going forward , we can still hold the same bias ; depending on the context provided during the meeting , we can further asses .
In the situation of :
*sorted from most / least likely*
- 25bps hike : likely priced in , prices neutral depending on the context provided as mention above
- pause : market likely to rally
- 50 bps hike : markets would see some decline
- interest rate cut : market rally
More news to follow
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