One major catalyst of the week can make a comeback or break as the market tries to recover from recent sales measures that left the S&P 500 (^GSPC) and NASDAQ (^Ixic) in the corrections domain. Wednesday’s Federal Reserve policy decision.
The central bank is expected to stabilize interest rates in the face of tariff uncertainty and recent growth concerns.
However, the simultaneous release of the Fed’s quarterly forecasts is called the Economic Forecast Overview (SEP) and is at the heart of investors’ unpacking, along with Fed Chairman Jerome Powell’s post-mortem press conference.
“Powell Post Form must reassure the market’s growth. Healthy and the inflation trajectory still shows 2%, as confidence shaking amidst the fear of stagflation, or confidence shaking amid the fear of a complete recession.”
A bleak economic scenario with growth stalling, inflation continuing and unemployment rising has become the latest trend in financial markets as investors try to understand the administration’s changing trade narrative and other policy unknowns, including Elon Musk’s recent efforts to cut government jobs from government efficiency (DOGE).
In a global survey of 171 participants, Bank of America’s latest Global Fund Manager Survey released Tuesday, 71% of investors surveyed expect STAGFLATION, the highest level since November 2023.
“In regards to growth (the “stud” part of Stag), Powell needs to reaffirm his recent clear certainty that despite the weak “soft” data, “hard” data remains collaborative,” writes Emmanuel.
“In the ‘tetrahedral’ part of Stagflation, Powell should show that even within the potential short-term hurdles, he remains in that path to 2%. ”
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