It’s Bill Rapp, the Mortgage Viking here, let me tell you about what the Good Ole Boys on Wall Street are talking about today…
With no policy changes expected at today’s FOMC meeting and only slight tweaks anticipated to the meeting statement, the stage is set for Fed Chair Powell’s press conference where he will more than likely be asked about the Fed’s plans for unwinding the balance sheet.
It is tough to pin cause and effect, but Wall Street has become obsessed with the Federal Reserve’s balance-sheet runoff, as investor’s debate ‘why it’s suddenly roiling markets more than a year after it began.
The S&P 500 plunged more than 3 percent following last month’s Fed meeting after Chair Jerome Powell said the balance sheet unwinding was on “automatic pilot,” forcing policy makers to re-craft their message on the fly.
On the flip side, U.S. stocks spiked higher Friday following the release of a Wall Street Journal article that reported that the Fed is weighing ending the reductions sooner than previously expected. The extent to which officials are ready to change tack should become clearer Wednesday following the Federal Open Market Committee’s first meeting of the year.
A survey of economists ahead of this week’s decision indicates that most don’t expect the central bank to slow or stop the balance sheet run-off this year, while the median forecast for interest-rate hikes is two in 2019.
Regardless of what officials signal, though, Wall Street is likely to remain on edge as it comes to terms with what the balance-sheet unwind actually means for markets.
That is all for today, please do not forget to subscribe and share this post if you found it useful!
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