861 days ago • Posted by Paul de La Baume
#Fed shifts to accelerated taper as expected 🚀 #markets #stocks #trading
US Fed eyes 3 rate Increases in 2022, slows stimulus in reaction to inflation. The taper pace is doubled from $15bn to $30bn/month, as expected. The market went from expecting 1 hike previously to 3 hikes now (the market assumed it would be 2 hikes, but is relieved it's not 4). The interest rate hike trajectory remains contingent on the economy. The aggregate 2022-2024 dot plot only went up by 1 hike. The Fed still expects the surge in inflation to come down, as greatly affected by the pandemic. Markets reacted overall well with major US indices gaining 0.8%-2% with those stocks particularly hurt in previous sessions rebounding. While the US tapering environment is not particularly positive for markets, they are rallying on the relief of not receiving the worst news. Investors positioning going into the meeting has been much more defensive lately and market sentiment is starting to strike a more positive tone. Perhaps investors will shift their eyes onto earnings again, which is what usually drives markets.
