Federal Reserve

I’m looking forward to when the Federal Reserve is no longer the top financial topic of the week!

Coming into 2024, investors banked on corporate profits increasing by double digits and the Fed cutting rates 5-6 times.

After last week’s hotter than expected Consumer Price Index (CPI) reporting a monthly increase of .4% and the Producer Price Index (PPI) reporting a .6% increase, most don’t see the Fed cutting at this Wednesday’s Federal Reserve meeting. 

What will be highly debated by the news media, is what to expect from the Fed’s “dot plot” announcement.  The dot plot averages the opinions of the members of the Federal Reserve as to when and how much rates will change.  The last dot plot announcement suggested 3 rate cuts this year.  Based on the hotter economic data, will the average opinion change?  Wednesday may be market moving, in either direction.

Markets Cooling?

After an amazing run higher from November 1st last year, the markets appear to be in a wait and see mode.  So much “goodness” has been priced into the markets.

Last week it was announced corporate profits are on track to increase 11% this year and the early consensus for 2025 is an increase of 13%.

I certainly hope profit expectations do come to fruition and inflation slows as desired.  We are now witnessing, inflation is not simply one plus one equals two, problem solved. 

For the week, the indexes feel backwards with the S&P 500 down (.19%), the Dow (.02%), the Nasdaq (.58%) and the Russell 2000 (2.18%).

Bond yields moved higher after the CPI and PPI reports with the 10-year US Treasury yield @ 4.308%

Oil should also be watched as the price of US Crude increased 3.99% last week and is now higher by 13.22% for 2024.

The Week Ahead

We’ll hear a handful of profit reports from FedEx, Nike, Micron, and Darden Restaurants, however most of the seasonal reporting is in the rear view.

The Fed is front and center however important Housing market data is released, including reports on building permits, housing starts and existing home sales.

Mortgage rates are staying persistently higher hovering around the 7% range.

In the very short-term, this Wednesday’s Fed announcements could be impactful to both the stock and bond markets.  Will the Fed stick to its prior dot plot or adjust the guidance?  At least we’ll know shortly.

Tax-Return Reminder

A reminder to existing clients, please forward a complete copy of your 2023 tax return when available.  We analyze various strategies to help reduce Uncle Sam’s share of your wallet to enhance your after-tax income.  We look to help reduce your tax liability today and over your lifetime. 

No Blog next week

Next week, Michelle and I will be away for a little R & R.  Look for the weekly Retirement Blog to resume on Monday April 1st.

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