The market had finally received what it needed. Uncle Powell spoke with great clarity on the future path of monetary policy action. We all know that the 50 basis point hike has been built into the market’s expectations for the past 6 weeks. Market participants were keen to know the next move.
🎉All is well🗽
Indeed, Uncle Powell indicated his view that there is a possibility of another two 50 basis point hike for the next 2 meetings. This is much lesser than the worried 75 basis point hike, which calmed the market.
Next, he further commented that a 75 basis point hike is not yet discussed on the table. This golden answer is sufficient to send the market rally. At the end of the 47 minutes press conference, the equity market was up by around 2%. In some commentary, Uncle Powell’s speech had added around $1.1 trillion in value to the S&P 500, which had jumped 2.99%, the best performance since May 18 2020.
⛳Credibility is restored🛎
Market participants are also assured of Uncle Powell’s perspective on the inflation outlook. He believed with a strong economy and household generally having a good balance sheet and a soft landing is still achievable.
Pika World will be using the chance to take profit on some position and reduce some loss position in any rally as we move towards a more conservative stance. Headwinds on the macroeconomic front have not faded considerably.
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