JPMorgan simulates what the Fed will decide at 2:00 a.m. tomorrow
5 possible outcomes + the reaction in U.S. stocks
In plain language:
1. No rate hike (dovish): There’s a risk of inflation rebounding, and the market worries prices won’t be brought under control. S&P 500 down 1.25%~1.75%
2. Raise rates by 25 bps, with little discussion of future policy (neutral, mildly hawkish): In line with market expectations—negative news is already priced in. S&P 500 up 0.25%~0.75%
3. Raise rates by 25 bps, and cancel next year’s rate-cut plan (mildly hawkish): The market recognizes the determination to tame inflation and thinks the hike is controllable. S&P 500 up 0.50%~1%
4. Raise rates by 25 bps; the market interprets Warsh’s remarks as implying that higher rates will be needed long-term (more hawkish): Worries that further hikes will follow. S&P 500 down 0.25%~1%
5. Raise rates by 25 bps and clearly signal that rates will be lifted even more (very hawkish): A new round of a sustained hiking cycle—danger for the bull market. S&P 500 down 1%~2%
$BTC
Which one do you think it will be?
5 possible outcomes + the reaction in U.S. stocks
In plain language:
1. No rate hike (dovish): There’s a risk of inflation rebounding, and the market worries prices won’t be brought under control. S&P 500 down 1.25%~1.75%
2. Raise rates by 25 bps, with little discussion of future policy (neutral, mildly hawkish): In line with market expectations—negative news is already priced in. S&P 500 up 0.25%~0.75%
3. Raise rates by 25 bps, and cancel next year’s rate-cut plan (mildly hawkish): The market recognizes the determination to tame inflation and thinks the hike is controllable. S&P 500 up 0.50%~1%
4. Raise rates by 25 bps; the market interprets Warsh’s remarks as implying that higher rates will be needed long-term (more hawkish): Worries that further hikes will follow. S&P 500 down 0.25%~1%
5. Raise rates by 25 bps and clearly signal that rates will be lifted even more (very hawkish): A new round of a sustained hiking cycle—danger for the bull market. S&P 500 down 1%~2%
$BTC
Which one do you think it will be?