There was a time long, long ago when Federal Reserve meeting announcements would come a surprise to market participants.
They might cut rates. They might hike rates. You just didn’t know.
That has all changed.
Since June 2009, there have been 96 FOMC Meetings…
- Before 84 of those meetings, the market was pricing no change in rates and the Fed held rates unchanged.
- Before 9 of those meetings, the market was pricing in a 25 basis point (bps) rate hike and the Fed hiked 25 bps (0.25% hikes in Dec 2015, Dec 2016, Mar 2017, June 2017, Dec 2017, Mar 2018, Jun 2018, Sep 2018, and Dec 2018).
- Before 3 of those meetings, the market was pricing in a 25 bps cut and the Fed cut 25 bps (0.25% cut in Jul 2019, Sep 2019, and Oct 2019).
- Last year, ahead of the March 18 meeting which was later cancelled, the market was expecting two emergency rate cuts and Fed indeed cut rates in unscheduled meetings on March 3 (50 bps cut) and again on March 15 (100 bps cut).
The playbook: whatever the market expects the Fed to do, the Fed does. With the market currently expecting no change in interest rates tomorrow, that is precisely what we’ll see.
And so without further ado, here’s tomorrow’s news, today…
July 28, 2021
BREAKING: FED HOLDS INTEREST RATES AT 0% AND PROMISES TO KEEP CREATING MONEY OUT OF THIN AIR TO BUY $120 BILLION IN BONDS PER MONTH. POWELL SAYS A) THERE’S NO INFLATION BUT EVEN IF THERE WAS IT WOULD BE “TRANSITORY” AND B) THERE ARE NO ASSET BUBBLES BUT EVEN IF THERE WERE THE FED’S EASY MONEY POLICIES WOULD HAVE NOTHING TO DO WITH THEM.
And in other news…
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