Rate Hike Expected With No Pause In Sight?
40% gain from taking calls on QQQ. The new pivot stands at 350 at present. ⚠️ Looking at calls above 351.2 and puts below 348.5 on Wednesday. Trade safe and stay nimble!
Investors are facing the potential that the central bank pivot narrative will again be reset to a later date, as their focus turns toward Friday’s payrolls report.
No pause in sight?
Traders are seeing strong odds for a Federal Reserve interest-rate hike next month, and they are certain one will come in July if the central bank ends up standing pat this time round.
That also makes the still-strong bets on rate cuts vulnerable to the same grim fate as similar previous wagers — like those that saw three rate reductions by the end of 2022 as of June 30 last year.
The continued mismatch between expectations and reality could be due to a key blind spot in the way economists and strategists are looking at the contradictory impact of the Fed’s policy settings.
Yes, it has raised its benchmark for borrowing costs to match the 2007 peak in an epic tightening shift. But at the same time its balance sheet has been trimmed only modestly and remains enormous. That helps to explain why bond yields have remained low compared to the cash rate in a way that is at odds with previous cycles.
The potential is that the Fed is going to need to hike further yet to counter the impact of its own balance sheet, as signaled by the extreme gap between the Fed funds target and the Taylor Rule that estimates where the rate needs to be.
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Rumor has it that they want QQQ at $375 before fed meeting. Okay. I am in for it. Lets take it to $375.
The Fed is walking a tightrope. It needs to raise rates enough to cool inflation, but it also needs to avoid raising rates so much that it causes a recession.
Whether or not rate hikes should be expected with no pause in sight is a complex question that depends on a number of factors.
Not able to break morning high or hold 355. It’s funny people trying to squeeze out the last drop and then lose next week.
Going by the last few inflation reports this will come in line or better than expected and QQQ will make a new pumply ATH.
They said market 3-5% up on debt celling voting week. Never underestimate them. 4.5% up so far and pushing for 5% end of week.
If inflation starts to come down, the Fed may decide that it does not need to raise rates as aggressively.
Stop trying to beat the QQQs heavily weighed immortal FAANGs, go after SPY puts instead.
Zerohero