Prism MarketView Econ Outlook: Fed Meeting Today at 2pm ET – Expectations, Concerns & Equity MarketWatch

Any investor with a pulse on the market has likely been listening to the chatter surrounding the upcoming Fed meeting today. The Fed statement is expected for 2pm ET on Wednesday and Chairman Powell is scheduled to speak at 2:30pm ET.

The Expectations:

  • The Fed is expected to increase rates by a quarter point (25bps) which would move the Federal Funds Target Rate to 5% from 4.75%.
  • Provide projections on the economy and the future of upcoming rate hikes.
  • Deliver an understanding of regional bank containment.

Looming Concern:

A large concern related to a rate hike is its effect on the current banking turmoil which could lead to a credit crunch as the Fed works to respond to inflationary pressures. If a rate hike sends more banks into trouble to what level can the Fed step in to aid while still trying to address inflation and meet its 2% target?

Equity MarketWatch:

As economic data becomes more plentiful investors are trying to navigate these choppy waters. Some sectors and tickers receiving attention:

  • Most obvious, the banking sector:
    • Regional Banks: First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL),Regions Financial (RF), and Zions Bancorporation (ZION).
    • Big Banks: Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C).
  • The homebuilding sector experienced a rally on Tuesday as existing-home sales in February came in higher than expected and the housing outlook improved. A rise in rates will likely subdue the spring housing market. However, investors should keep in mind that mortgage rates are determined by the daily trading of mortgage bonds. As bond investors digest the Fed’s ability to moderate inflation, the strength of their bullish appetite will further dictate where mortgage rates will move.
    • Housing Equities: D.R. Horton (DHI), PulteGroup (PHM), Lennar (LEN) KB Home (KBH), Home Depot (HD), and Masco Corp (MAS).

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Prism MarketView Econ Outlook: Fed Meeting Today at 2pm ET – Expectations, Concerns & Equity MarketWatch

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