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April Fed Meeting Tapers QT

The Federal Reserve completed its April meeting, and kept the fed funds rate unchanged. Your bullet points ahead of Chairman Powell’s 2:30PM press conference.

 

  • The fed funds rate remains unchanged at 5.25% – 5.50%. Earlier this year, most market participants expected the Fed to cut by either the January meeting or the March one. DKI said that wasn’t going to happen. Market expectations shifted, and today’s “pause” was not a surprise. Expectations for the first rate cut recently moved from June to September, but early betting this afternoon is now trending towards November.

 

  • The press release was more clear than usual. Last month, there was intentional ambiguity in the language used. This month, the release notes expanding economic activity and a strong job market. It also says the Committee is “strongly committed to returning inflation to its 2 percent objective” and admits there has been a lack of progress in recent months towards getting there.

 

  • This is a slightly more hawkish message than we saw last month, but as always, the Fed says it will remain data driven and continually evaluate conditions.

 

  • The only meaningful change is the Fed announced an intention to start to taper quantitative tightening (QT). That means they’ll slow the rate at which they shrink the Fed balance sheet. Monthly net redemptions on Treasury securities are being cut from $60B to $25B. Monthly redemptions of other securities like mortgage-backed securities will stay at $35B.

 

  • I’ll be on Powell’s press conference which starts shortly and will post any additional information should he say something newsworthy.

 

  • DKI continues to believe that inflation is elevated, understated, and a problem that won’t be solved soon. We maintain positions in inflation hedges and beneficiaries like Bitcoin, gold, and energy. Subscribers are encouraged to check out the Current Recommendations page for specific tickers.

 

GB@DeepKnowledgeInvesting.com if you have any questions.

 

Information contained in this report is believed by Deep Knowledge Investing (“DKI”) to be accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied and DKI makes no representation as to the completeness, timeliness or accuracy of the information contained therein or with regard to the results to be obtained from its use.  The provision of the information contained in the Services shall not be deemed to obligate DKI to provide updated or similar information in the future except to the extent it may be required to do so. 

 

The information we provide is publicly available; our reports are neither an offer nor a solicitation to buy or sell securities. All expressions of opinion are precisely that and are subject to change. DKI, affiliates of DKI or its principal or others associated with DKI may have, take or sell positions in securities of companies about which we write. 

 

Our opinions are not advice that investment in a company’s securities is suitable for any particular investor. Each investor should consult with and rely on his or its own investigation, due diligence and the recommendations of investment professionals whom the investor has engaged for that purpose. 

 

In no event shall DKI be liable for any costs, liabilities, losses, expenses (including, but not limited to, attorneys’ fees), damages of any kind, including direct, indirect, punitive, incidental, special or consequential damages, or for any trading losses arising from or attributable to the use of this report. 

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