<\/a>Financials<\/u> –
\nOverall I would have to characterize yesterday\u2019s FOMC statement as relatively dovish.\u00a0 The key point in the statement was the Fed keeping the same language showing \u201ceconomic conditions will evolve in a manner that will warrant only gradual increases\u201d in rates.\u00a0 March rate hike odds have fallen since the statement release and with the market looking beyond March now it might seem reasonable to only expect 2 rate hikes this year (Jun & Dec).\u00a0 As you know, I\u2019ve been of the opinion that we could see 3 hikes this year and I must admit the confidence is lowered following this statement.\u00a0 Fed Funds futures are basically pricing in 2 rate hikes this year, so these might actually be appropriately priced for now.\u00a0 I had thought inflation expectations and the new administration might change sentiment on the FOMC, but instead for now it appears we\u2019re looking at the same \u2018ol Fed.<\/p>\n
If indeed we\u2019re looking at the same \u2018ol Fed, then some of the new price action we\u2019ve seen lately might come into question, right?\u00a0 Is the short-bonds trade stretched without higher rates?\u00a0 Is the crowded long-USD trade in trouble without a hawkish Fed now that the technicals might be turning?\u00a0 The long-financials (XLF) trade would prefer higher rates too.\u00a0 If any of these start to unravel, even temporarily, it will make for some interesting volatility.<\/p>\n
No major market data today in the US, though the BOE will announce their monetary policy this morning (no change expected).\u00a0 Tomorrow we have NFP, with expectations running high after yesterday\u2019s ADP print.<\/p>\n
DISCLAIMER<\/u><\/strong>:<\/strong> Financials – Overall I would have to characterize yesterday\u2019s FOMC statement as relatively dovish.\u00a0 The key point in the statement was the Fed keeping the same language showing \u201ceconomic conditions will evolve in a manner that will warrant only gradual increases\u201d in rates.\u00a0 March rate hike odds have fallen since the statement release and with […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[],"yoast_head":"\n
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