I think the banks are right ab-To The Moon - Tiger Brokers Online Investing Community - To The Moon

I think the banks are right about one thing: the 25bp hike itself is largely priced in. With markets putting roughly 90%+ odds on it, the bigger risk is not Wednesday’s hike but what comes next.

If the Fed signals this is a limited adjustment, earnings and growth can probably keep supporting equities. But if oil, inflation and yields force markets to price a longer hiking cycle, “priced in” gets recalculated very quickly. With the 10Y around 5%, I’m watching the Fed’s message more than the 25bp headline.

Markets Rebound Day After Rate Hike — What's Driving the Rally?

Stocks took back Wednesday's Fed day and more: QQQ +1.73% to $716.92, SPY +1.13% to $762.60, the S&P 500 +1.14% to 7,637.76, against Wednesday's 0.45% decline. The lift came from outside the Fed. Weekly jobless claims unexpectedly fell, which says the labor market is not cooling the way the rate path assumes, and oil kept sliding, easing inflation pressure. Yields fell and megacap tech led. The uncertainty everyone waited on is behind the market now. But the dot plot still points to one more hike this year, and only the hike already delivered is in the price. What is the market betting on?

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Comments

JamesWalton
09-16 13:02
JamesWalton
Oil and sticky inflation still look underpriced to me. If they try to sell this as a limited tweak, the market may buy it for a day, but the path still feels more hawkish
CyrilDavy
09-16 13:02
CyrilDavy
The 2Y-30Y shape matters more here than the 25bp too. If the front end stays sticky while long bonds keep leaking, that longer-cycle repricing hits equities fast

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