FOMC Keeps Threat of Interest Rate Hike “In the Mix”

FOMC Keeps Threat of Interest Rate Hike “In the Mix”

FOMC Keeps Threat of Interest Rate Hike “In the Mix”

$DIA, $SPY, $QQQ, $VXX

Wednesday afternoon, the US Fed kept interest rates unchanged, and indicated their confidence in the anemic US economy, thus keeping the door open to a hike in June.

The FOMC said the labor market had improved despite a recent economic slowdown and that it is keeping a close eye on inflation.

It added that global economic challenges are still in focus, but removed a specific reference from its last policy statement to the risks they posed.

“The committee continues to closely monitor inflation indicators and global economic and financial developments,” the Fed said in a statement following a two-day meeting.

It kept the target range for its overnight lending rate unchanged in the range of 0.25 to 0.50%.

For the 3rd meeting running, the Fed did not include any mention of the balance of risks to the economy.

It noted that while growth in household spending had moderated, households’ real income had risen at a “solid rate” and consumer sentiment remained high.

It added that it remained confident inflation would rise to its 2% target in the medium term, it has not to date.

 

The Fed policymakers are still projecting 2 rate hikes in Y 2016, compared to the 4 hikes forecast in December.

Stocks have continued to rise since the Fed’s March policy meeting on the continuing supply of “cheap money” and the pick-up in China’s economy.

Other major central banks have been grappling with ways to deal with anemic economies, including the adoption of negative interest rates.

An initial estimate of US Q-1 GDP is expected on Thursday to show little to no growth.

Wednesday, the US major stock market indexes finished at: DJIA +51.23 at 18041.55, NAS Comp -25.17 at 4863.14, S&P 500 +3.45 at 2095.15

Volume: Trade was above average with about 971-M/shares exchanged on the NYSE

  • DJIA+3.5% YTD
  • S&P 500 +2.5% YTD
  • Russell 2000 +1.6% YTD
  • NAS Comp -2.9% YTD
HeffX-LTN Analysis for DIA:  Overall Short Intermediate Long
Bullish (0.41) Bullish (0.43) Bullish (0.48) Bullish (0.33)
HeffX-LTN Analysis  for SPY:  Overall Short Intermediate Long
Bullish (0.37) Bullish (0.44) Bullish (0.37) Bullish (0.31)
HeffX-LTN Analysis for QQQ:  Overall Short Intermediate Long
Neutral (0.05) Neutral (-0.03) Neutral (0.07) Neutral (0.10)
HeffX-LTN for Analysis VXX: Overall Short Intermediate Long
Bearish (-0.48) Bearish (-0.49) Bearish (-0.44) Very Bearish (-0.50)

Stay tuned…

Paul Ebeling

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