{"id":59227,"date":"2022-03-16T21:54:52","date_gmt":"2022-03-17T04:54:52","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=59227"},"modified":"2022-03-16T23:52:07","modified_gmt":"2022-03-17T06:52:07","slug":"stock-market-relief-fuel-even-as-rate-hike-odds-soar-the-market-breadth","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2022\/03\/16\/stock-market-relief-fuel-even-as-rate-hike-odds-soar-the-market-breadth\/","title":{"rendered":"Stock Market Relief Fuel Even As Rate Hike Odds Soar – The Market Breadth"},"content":{"rendered":"\n

Stock Market Commentary<\/strong>:<\/h2>\n\n\n\n

I will not attempt to back my way into an explanation for today’s impressive rally in the stock market. Maybe the surge is another classic bear market relief rally. Maybe the relief fuel symbolizes a market finally ready to leave a bottom behind. Time will tell. What IS clear is that the stock market looked past an incrementally more hawkish Fed to buy up anything not already nailed down. Meanwhile, Fed fund futures<\/a> took note and increased the odds of much higher rates by December. Specifically, the futures punched above the critical 50% probability for rates to get as high as 2.0% to 2.25% at the end of the year.<\/p>\n\n\n\n

\"Today's<\/a>
Today’s statement on monetary policy hurdled over the odds of a 200 to 225 basis point rate by December over the key 50% mark (37.2% + 13.8% + 1.1%). Source: CME FedWatch Tool<\/a><\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

From the Fed’s statement<\/a>:<\/p>\n\n\n\n

“With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1\/4 to 1\/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting…<\/p>

Voting against this action was James Bullard, who preferred at this meeting to raise the target range for the federal funds rate by 0.5 percentage point to 1\/2 to 3\/4 percent.”<\/p><\/blockquote>\n\n\n\n

I was looking for the Fed to get hyper-creative<\/a> to thread the needle between aggressively fighting against today’s inflationary pressures and the risks of sending the economy into a recession. Instead, the Fed chose to keep it plain and simple: claim future success. From Chair Jerome Powell’s introductory statement<\/a>: “We are attentive to the risks of potential further upward pressure on inflation and inflation expectations. The Committee is determined to take the measures necessary to restore price stability. The American economy is very strong and well positioned to handle tighter monetary policy.”<\/p>\n\n\n\n

The Fed’s claim is good enough for the stock market for now.<\/p>\n\n\n\n

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