Trade Plan Wednesday.
Pivot is 4067.
Below targets 4043 / 4026. Break and hold < 4026 targets 4008 / 3991.
Above targets 4078 / 4088. Break and hold > 4088 targets 4101 / 4110.
*Remember tomorrow is another data dependent event. The FOMC minutes will be released at 2PM EST followed by the conference half and hour later. We must be flexible with the plan, levels, and adjust with the intraday conditions as it will be at the mercy of the FED FOMC.
I am anticipating that Powell will stick to a 50 BPS rate hike. This 50 BPS is widely held consensus view.
So I think for me personally the “surprise” factor tomorrow will be either of the 2 below:
A 75 BPS rate hike
Or something in the statement or the conference that indicates going higher than a 5-5.25% neutral rate.
My .02
I think a 50 BPS hike tomorrow along with no mention of a higher than 5.25% terminal rate could be perceived as dovish in the short term. The FED will need to come in with verbiage to the effect that they could go higher, much higher than the current projections of the terminal rate if needed , for longer than currently forecasted. A growing belief is that the FED will cut rates next year; this needs to be quashed tomorrow by this FED. If not, this in my view will be a dovish FOMC.
Stay Frosty!
Pivot is 4067.
Below targets 4043 / 4026. Break and hold < 4026 targets 4008 / 3991.
Above targets 4078 / 4088. Break and hold > 4088 targets 4101 / 4110.
*Remember tomorrow is another data dependent event. The FOMC minutes will be released at 2PM EST followed by the conference half and hour later. We must be flexible with the plan, levels, and adjust with the intraday conditions as it will be at the mercy of the FED FOMC.
I am anticipating that Powell will stick to a 50 BPS rate hike. This 50 BPS is widely held consensus view.
So I think for me personally the “surprise” factor tomorrow will be either of the 2 below:
A 75 BPS rate hike
Or something in the statement or the conference that indicates going higher than a 5-5.25% neutral rate.
My .02
I think a 50 BPS hike tomorrow along with no mention of a higher than 5.25% terminal rate could be perceived as dovish in the short term. The FED will need to come in with verbiage to the effect that they could go higher, much higher than the current projections of the terminal rate if needed , for longer than currently forecasted. A growing belief is that the FED will cut rates next year; this needs to be quashed tomorrow by this FED. If not, this in my view will be a dovish FOMC.
Stay Frosty!
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