To The Moon

Last Session

The Federal Reserve opted to maintain its federal-funds rate target range and uphold its forecast for policy in 2024. The decision was accompanied by a largely unchanged policy statement from the FOMC, acknowledging ongoing economic strength and persistent inflationary pressures. Despite recent inflation spikes, Fed Chair Jerome Powell expressed cautious optimism, emphasizing the need for sustained progress in mitigating inflation before considering rate cuts.

Fed Funds

$S&P 500(.SPX)$ was up 0.9%, the Dow Jones Industrial Average added 1%, and the$NASDAQ(.IXIC)$ climbed 1.3%. All three indexes closed at record highs. The last time that happened on the same day was in early November of 2021.

SPX

Key Events of the Session

• Interest Rate and Policy Projections: The FOMC unanimously voted to keep the federal-funds rate target range steady at 5.25% to 5.5%. Policy projections continued to indicate expectations for three quarter-point cuts throughout the year.

• Federal Reserve still foresees 3 interest rate cuts in 2024

FOMC

• Inflation Assessment: Powell addressed higher-than-expected inflation readings for January and February, attributing them to temporary factors. The Fed remains vigilant but emphasizes the importance of gradual policy adjustments.

• Quantitative Tightening (QT): Powell hinted at slowing the pace of quantitative tightening, signaling a potential shift in the Fed's balance sheet strategy. This move aims to mitigate potential market stress while allowing for continued reduction in the balance sheet.

Market Scenario

1. Market Response: Despite initial apprehensions, investors reacted positively to the Fed's decision, leading to a surge in major indexes. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed at record highs, indicating confidence in the Fed's approach.

$Tesla Motors(TSLA)$ $NVIDIA Corp(NVDA)$ $Advanced Micro Devices(AMD)$ $Marathon Digital Holdings Inc(MARA)$

2. Long-Term Policy Outlook: While the Fed maintains its stance for 2024, there are indications of a gradual shift towards tighter policy in the coming years. Officials' forecasts for interest rates suggest a slower descent from recent highs, reflecting evolving economic conditions.

3. Market and Fed Discrepancy: Discrepancies between market expectations and Fed projections regarding longer-term interest rates persist. Market participants anticipate higher rates compared to the Fed's estimates, signaling potential adjustments in future policy guidance.

Conclusion

The Fed's decision to hold rates steady while signaling a cautious approach towards inflation reflects its commitment to balancing economic growth and price stability.

Market participants responded positively to the news, driving major indexes to record highs.

However, ongoing disparities in longer-term rate forecasts highlight the complexity of navigating economic uncertainties.

This analysis is provided for informational purposes only and should not be construed as financial advice. Investors should conduct thorough research and consult with financial professionals before making investment decisions. Past performance is not indicative of future results, and trading in financial markets carries inherent risks.

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@TigerStars @CaptainTiger @Tiger_SG