FOMC Day Trading Expectations

Expect Fed Chair Powell to keep his message consistent
The new dot plot will also be in focus by traders
We see a lack of reasoning for Powell to sound particularly hawkish
FOMC Decision and Powell's Message

FOMC Decision and Powell's Message

FOMC Decision Market Insights


Mohammed Kazmi, Portfolio Manager for UBP's Global & Absolute Return Fixed Income team, breaks down the FOMC meeting taking place today, where the committee will announce its interest rate decision and Jay Powell will host a press conference.


Jay Powell’s Message & Board Views

“We expect Fed Chair Powell to keep his message consistent with recent communication by describing policy as being in a good place. The board will feel pretty comfortable with their current stance following the latest labor market data, which showed a pick-up in payrolls, as well as another decline in the unemployment rate. The new dot plot will also be in focus, where we anticipate for the board to have unchanged rates as their median view for 2020, although some of the more hawkish members will be having hikes from 2020 in their projection.
 

FOMC Effective Federal Funds Rate
Source Tradingview

“Given still muted inflation, we see a lack of reasoning for Powell to sound particularly hawkish, especially given that this meeting comes just a few days before the December 15th deadline of new tariffs from the US on China, which if implemented could once again cloud the outlook and weigh on risk markets given the lack of pricing for a trade escalation.”

Lagarde’s first press conference as ECB president & UK elections

“Other upcoming events this week include Lagarde’s first press conference as ECB President and the UK elections, where if risk markets are able to come out of this week unscathed, it would provide a signal of resilience for markets heading into 2020. You could see rates markets sell-off if all these risk events go the right way in the coming week, however this would be a move that we would look to fade, adding back to duration on a yield spike given that the Fed remains very far from hiking and as inflation globally remains muted.”

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