Fed Hikes, Removes ‘Dovish’ Language from Policy Statement

Fed Hikes, Removes ‘Dovish’ Language from Policy Statement

Fed Hikes, Removes ‘Dovish’ Language from Policy Statement

$DIA, $SPY, $QQQ, $RUTX, $VXX

The FOMC increased short-term interest rates Wednesday, as expected, raising the fed funds target range by 25 bpts to 2.00-2.25%.

The move reflected an upbeat assessment of the economy that was identical to the central bank’s last policy statement 8 weeks ago, despite concerns over President  Trump’s trade disputes.

Growth and job gains have been “strong” and inflation remains near the central bank’s 2 percent target, the Federal Open Market Committee (FOMC) said in its statement Wednesday following a 2-day meeting in Washington.

Barring a negative surprise in the economy, updated “ dot plot” forecasts made a December rate hike almost certain, as the number of FOMC officials expecting another increase by year-end grew to a bigger majority of 12, from 8 in the prior round of projections in June.

In the statement’s only change from the previous one issued Aug. 1, the committee dropped its long-standing description of monetary policy as “accommodative.”

That is an acknowledgment rates have moved closer to the neutral mark which neither boosts nor restrains the economy.

The tweak in language led investors to sell the dollar and buy Treasuries on the assumption it meant the Fed would be less aggressive in the future. The US Dollar (.DXY) fell as much as 0.3% to a session low and the yield on 10-year T-Note dropped to as low as 3.061% from around 3.08% before the decision.

Fed Chairman Jerome Powell and his colleagues are trying to pull off a feat the central bank has accomplished only once in its 104-year history: Engineer a soft landing of the economy by raising rates just enough to prevent overheating, but not so much that they trigger a recession.

President Donald Trump said Wednesday he’s “not happy” about the Federal Reserve’s decision hours earlier to raise interest rates for a 3rd time this year.

“Unfortunately, they just raised interest rates,” President Trump said at a press conference in New York, where he was attending the annual United Nations General Assembly. “I am not happy about that.

Wednesday, the major US stock market indexes finished at: DJIA -106.93 at 26385.28, NAS Comp -17.11 at 7990.35, S&P 500 -9.59 at 2905.97

Volume: Trade on the NYSE came in at 829-M/shares exchanged

  • NAS Comp +15.8% YTD
  • Russell 2000 +10.2% YTD
  • S&P 500 +8.7% YTD
  • DJIA +6.7% YTD

HeffX-LTN’s Major US Stock Market Indexes Technical Analysis

Date Symbol Price Technical Analysis Support Resistance
26 September 2018 QQQ 184.01 Bullish (0.29) 182.65 186.74
26 September 2018 DIA 263.85 Bullish (0.48) 263.48 265.77
26 September 2018 SPY 290.59 Bullish (0.36) 286.22 294.74

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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