With the market on edge for another interest rate cut, the Federal Open Market Committee’s (FOMC) September minutes will shed light on the Fed’s game plan and the mixed opinions of its officials.
The key lies in Fed Chair Jerome Powell’s tie. He communicates with the tie.
PURPLE = 20X leverage everything
BLUE = Sell everything.
This has worked for every single FOMC since 2021. We’re kidding, of course. Or are we? Anyway, here’s what to expect.
The Fed Can’t Agree On Anything
Breaking from tradition, the Fed cut rates by 50 basis points in September, twice the usual size, fueling talk of a dovish policy shift.
“A look at the SEP would be a start,” Jerome Powell remarked this week, hinting at the Summary of Economic Projections as a key tool for predicting the Fed’s future actions.
#FOMC rate cut probabilities from CME’s Fedwatch tool not much changed after all the #Fed speakers so it looks like that will probably be the case until we get to CPI Thursday although we do get the Sept minutes tomorrow which could move things around. The chance of 25bps in Nov… pic.twitter.com/bEIY6CSTcf
— Neil Sethi (@neilksethi) October 8, 2024
Despite the drastic rate cut, a rift within the Fed is clear. Governor Michelle Bowman dissented, preferring a smaller cut compared to last month. The “dot plot,” which showcases Fed opinion, exposed this split even further, with few supporting the aggressive forecast.
The Fed’s move occurs against a backdrop of conflicting economic signals. While the labor market cools, other metrics indicate strength, complicating their strategy.
Recent job data highlighted unexpected growth in the US economy and a drop in unemployment, adding to the complexity.
As Federal Reserve Governor Adriana Kugler said Tuesday, “The labor market remains resilient, but I support a balanced approach to the FOMC’s dual mandate.
If the FOMC minutes suggest caution instead of a full dovish turn, it might cool hopes for more rate cuts, hurting stocks and bonds.
The Road Ahead From FOMC: Will Q4 Bring The Bull Run?
In recent weeks, Powell has shifted to a cautious tone, aware of the looming risks of cutting interest rates too quickly. Remember, kids: it’s all in the tie. Kugler, meanwhile, champions a balanced method, tracking global trends to inform policy.
“If progress on inflation continues as I expect, I will support additional cuts in the federal funds rate,” she noted on Tuesday.
China took it on the chin today while money continued to flow into AI and chip leaders. Tech and software led the way. TSM has sales data coming out tomorrow, which could accelerate the move in either direction. Along with the FOMC minutes on tap, it’s a big week for the market.… pic.twitter.com/ZYF0GFQXVE
— John🎣 (@BottomPhishing) October 8, 2024
As the Fed juggles all these problems, all eyes are on the impending FOMC minutes for hints of their next move.
Market watchers should be ready to adjust if the Fed’s message diverges from current expectations.
Related: Hong Kong’s First Inverse Bitcoin ETF To Launch This Week
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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