Gut feeling says a down week … but a range of indicator charts provide mixed signals … ground hog week lol.
It’s pretty much a given the Fed will hold interest rates unchanged when announced Wed 2pm NYT. However the Fed Board also provides a quarterly updated “dot plot” consensus of their assessment of where interest rates will drop by the end of 2024 and further ahead to the end of 2025.
Investors have already reluctantly and tardily dialled back expectations from 6 to 3 x 0.25% cuts this year as the DOW has essentially traded sideways from the end of Jan. Hot Jan inflation was initially brushed aside, but hot Feb inflation seems to be causing a rethink.
Markets will probably brush aside suggested further delay until the first cut provided the “dot plot” remains unchanged. However imo there will be a sharp market adjustment if the updated dot plot suggests less than 3 x 0.25% cuts this year. It could get ugly if the “dot plot” and Powell’s Wed 2.30pm NYT press conference can be interpreted by traders to give credible odds for no rate cuts this year.
