The Fed removed hope of a March rate cut.

Welcome to the trading day of a new month. January has been a positive month for major indices, but the latest FOMC briefing has dampened risk-on sentiments. 

Let us review what Uncle Powell had said. 

🎯Interest rates remain unchanged, and there is an omission in the language to suggest more interest rate hikes. This is a positive sign. 

🎯In the press conference, Uncle Powell reiterated that inflation is “still too high” and clarified the idea of a March rate cut as unlikely. This sent equities on a downward spiral.

💰Then came the question of Quantitative Tightening, our highlighted focus. It is a tool that the Fed has used to slow down the economy by removing the money supply from the economy as it allows some of its debt securities to mature without reinvesting the principal. 

Uncle Powell discussed the likelihood of the discussion on its balance sheet in March FOMC, which will be consistent with the general idea of easing monetary policy sometime this year. 

💰One exciting idea is that Uncle Powell stated that the Fed isn’t focusing on crashing the labour market but will focus on balancing its dual mandate: full employment and a healthy price level in the economy. This may put investors at ease, but the prospect of a slowing economy will still ignite on whether we will still have a soft landing. 

🎙What’s on the menu today?📖

1) At 10.45 pm, we will have the S&P Global Manufacturing PMI.

2) ISM Manufacturing Employment data will be released at 11 pm. This will also be when ISM Manufacturing PMI and Prices will be released. 

Traders will also look ahead to crucial labour market data on Friday. 

It is 1 Feb, Thursday, 8.45 am in Singapore and 8.45 pm in New. York. The market crashed on Uncle Powell’s comment about no rate cut in March, but on the overall trend, we are still constructive on the economy and equity market.