Wednesday is Fed day, when the Federal Reserve will announce its latest interest rate hike plans.
Pretty much everyone expects a 0.25% hike, which will take the benchmark rate up to a range of 4.5% to 4.75%.
So that’s expected, and they’ll likely do another 25 basis points at the next Federal Open Market Committee meeting to get us to 5% on the benchmark rate. But here’s the interesting part…
If you look at the U.S. 2-Year Treasury, which was around 4.25% on Tuesday afternoon, people are pricing in 75 basis points (0.75%) worth of rate cuts two years from now.
And I’m not so sure about that…
Looking 10 years out at the 10-Year Treasury, that would make more sense to me because I think the Fed will keep rates higher for longer. And oftentimes, the market works against these people at the Fed.
Just look at the face-ripper of a rally we’ve had to start 2023… That’s counter-productive to what these people are trying to accomplish, and it’s inflationary.
On the other hand, there are still some people who think the Fed will go ahead with 50 basis points this week, but I think that’s a bit too crazy and would nuke all of the market’s gains this year.
It would cause a market crash.
I figure the market will dip a bit ahead of Wednesday’s 2 p.m. ET announcement, but that’s a dip I’d probably buy because I think it will be 0.25%, and that would likely send stocks ripping higher by Thursday morning.
Speaking of Thursday morning, I’m hosting a live trading session at 11 a.m. ET, and I’d like to invite all of my readers! Here’s the link to join the room, see you Thursday!
Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com with your trading questions and I may cover them in a future video. You can also join my free Telegram channel, where I share market insights real time throughout the week, articles, videos and more!
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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