Our Urgent Market Update Video reviews important real-time market developments and their impact on high-probability trading opportunities. Today, we discuss why a dovishly hawkish Fed is causing significant weakness in the markets. “Dovishly hawkish” sounds like a counterintuitive statement, however, we find it best describes the fundamentals behind these current market conditions.
This all began with the FOMC on Wednesday evening at 7:00 pm (UK Time) where the Fed decided to lower rates a further 25 basis points. This would imply a dovish policy stance, however, what the Fed and Jerome Powell went on to explain is that the FOMC are less likely to cut as many times as was previously expected, just as far back as September. With really strong US growth, low unemployment numbers and sticky inflation (putting it politely) you would be forgiven to ask why the FED needs to cut at all. This is a great question that the markets are now finally beginning to realise.
As a result, we have seen significant technical sell-offs. In fact, the weakness in the S&P 500 post-FOMC on Wednesday night was the weakest we have seen since 2001. After yesterday’s dead-cat bounce, we are now finally seeing further Indices weakness as the day unfolds with further weakness or profit-taking likely. As to what this means till year-end is yet to be seen but, for now, sellers are firmly in control.
Dovishly Hawkish Fed Causing Significant Market Weakness – Full Video Analysis
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