Shelton Capital Management’s FOMC Briefing
Keep on Your Radar:
- More economic data to provide greater macro-economic clarity
- Further hard data verifying either higher employment or rising inflation, like initial jobless claims and/or next week’s CPI
Key Takeaways:
- As expected, The Fed held its benchmark rate steady at 4.25% – 4.50%
- Outlook uncertainty has increased further
SCM Analysis:
- In English class, we likely learned that the first sentence of a story is essential and sets the tone
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- Today’s first statement from the FOMC statement emphasizes how “net exports have affected the data,” setting a patient tone for The Fed as it waits for more and clearer hard data given evolving policy changes
- If hard data shows a weaker employment picture, then it paves the way for The Fed to cut rates
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- Without weaker employment and if hard data shows higher inflation (especially if it’s sticky), then the Fed Funds Rate is likely to be unchanged
- Chairman Powell does not think The Fed needs to be in a hurry to adjust rates, but markets are impatient, so Shelton Fixed Income expects more volatility and opportunities to generate alpha
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