No surprises with a 25BP hike and removing the accommodative language, indicating the Fed is on inflation watch. But, it does not see inflation as a problem.
The high points:
2.25% +25BP. Removed language re accommodative policy.
Sees further gradual increases will be consistent with policy
12 of 16 for a fourth hike (up from 8 in June)
Going above neutral in FOMC forecast for at least 2 years (3.75% 2020-21)
Sees GDP above long run rate for 4 years
Economy: almost a carbon of the prior statement
Labor market continues to strengthen
Activity at a strong rate.
Household, business spending growing strongly
Core inflation 2%, risks balanced.
GDP forecast 3.1% for 2018; 3.2% 2019; 3.4% 2020
Stocks jumped up on the news, faded some of that gain in the next five minutes, now trying to rebound once more.
SP500 10.75, 0.37%
NASDAQ 42.19, 0.53%
DJ30 76.81, 0.29%
SP400 -0.11%
RUTX -0.22%
NASDAQ -0.08%
Financial stocks are still modestly negative on the session but are off the pre-FOMC levels and trying to bounce. They should bounce, but will see if they can do it and hold it.
______________________________________
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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