FOMC Updates May 3rd, 2022

Tomorrow afternoon at 1:00 PM Central, the federal reserve is set to raise interest rates 50 basis points.  The market has already priced this in so traders should focus on the verbiage that Chairman Powell has during his news conference following the announcement.  The problem that the fed has and has been consistent over the years is that they are to late to react.    

With CPI making thirty-year tear highs this year, in my opinion should have started the hiking cycle much earlier in the year.  All they had to do was to look at the rapid rise in the price of oil and food since beginning of 2020.  So now the Fed will start a series of rate hikes, as there is a widespread slowdown in the US and China and the fear is now that as hikes ensue, so likely with be a recession.  

Consumer Sentiment remains weak as does the ISM and manufacturing sectors.    Looking at how might the markets react once the announcement is made; I believe stocks will rally simply because its priced in already and that investors and traders alike will see the fed trying to regain some credibility albeit way late to the party.

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Greg Perlin

Senior Market Strategist

Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.

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