February 3, 2023

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Fed keeps the Goldilocks scenario intact

1 min read

US equities closed lower yesterday but futures point to a strong rebound


The Fed stuck to the script yesterday with Powell reaffirming two key points:Invest in yourself. See our forex education hub.

  1. The Fed is not close to consider tapering bond purchases just yet
  2. Transitory inflation above 2% would not cut it in terms of convincing them to start more aggressive tightening in policy
As such, it keeps the Goldilocks scenario in equities well intact – barring any major uptick in Treasury yields back towards 1.75% and beyond that is.

That said, given such frothy levels, things may not be as straightforward for equities in the weeks/months ahead. The S&P 500 touched 4,200 yesterday, which is seen as a year-end target for a number of firms.

I would not discount bouts of volatility that could follow but in the event of any major dip, I don’t see any other play besides buying that up – at least for now.

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