Tuesday's Close

E-mini S&P 500 (September): Settled at 4236.50, down 9.25

E-mini Nasdaq-100 (September): Settled at 14,021.75, down 95.50

It’s Fed Day: the committee concludes their 2-day policy meeting at 1:00 p.m. CT. They’re expected to keep rates unchanged and maintain the pace of their monthly asset purchases. Market participants will dive into the policy statement and economic projections for any clues as to when the committee will begin thinking about tapering those purchases. 

Fed Chair Jerome Powell begins his press conference at 1:30 p.m. CT and will certainly face a gauntlet of questioning. Inflation can now be seen rising through the Fed’s metrics and has shown up in everyday lives around the globe. 

This is the perfect time to remind you of the bank’s dual mandate of maximum employment and stable prices. Job growth has been tepid after March’s blowout report and, although prices in a growing number of assets have risen, there’s yet to be proof that it’s anything other than transitory. 

At the turn of the year, the Fed called for a rise in inflation to begin this spring and last through the summer. This is exactly what we’re seeing; but from day 1, the Fed has also believed this rise will be transitory. Furthermore, last year they made a drastic policy shift to Symmetrical Inflation Targeting, meaning that they’ll allow inflation to run as hot as it was running cold. 

Through their communications, they’ve furthered the notion by promising to be patient and essentially behind the curve as they wait for proof that inflation isn’t merely transitory. It’s for these reasons we expect them to hold policy steady and this should support risk assets.

Don’t miss our daily Midday Market Minute from yesterday.

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