🚨ATTENTION🚨
TODAY THE FED WILL VERY LIKELY RAISE THE RATE FOR THE FIRST TIME SINCE 2023. WHAT DOES HISTORY SHOW?
💸 The market assigns a 93% probability to the first rate hike since July 2023. The decision is at 14:00 and the press conference at 14:30.
🎯 Since 2008, whenever expectations have been this high, the FED has delivered without exception.
🔸If today it decided to keep it unchanged, it would be a surprise on the rate side, although the market reaction would depend on the message about future hikes.
🔸The particular detail that makes this unique: Warsh was appointed by Trump just a few months ago with the expectation that he would LOWER rates.
🔸And his first move at the head of the FED will be exactly the opposite.
What historically happened after the first rate hike of a cycle?
▪️ In the 7 episodes since 1988, the #SP500 fell on average 4.0% in the following 6 weeks.
▪️ But it RECOVERED ALL of that loss in the next 5 or 6 weeks.
▪️ At 6 months, average performance was +4.0%.
▪️ At 12 months, +9.0%, with a positive return in all episodes except 2022.
🧨 The subsequent declines after rate hikes were historically excellent buying opportunities. The scare is in the first few weeks, not during the year.
📍 The scenarios handled by JP Morgan’s trading desk for today:
▪️ No hike: the SP500 DOWNS between 1.25% and 1.75% because they expect it to signal FUTURE rate hikes
▪️ 0.25% hike with a signal that it would be the ONLY rate hike: the SP500 RISES between 0.50% and 1%
▪️ 0.25% hike signaling “materially higher” rates: the SP500 falls between 1% and 2%
📍 What the market would punish wouldn’t be the hike itself, but the message that many more are coming. $BTC $ETH $SPYB
TODAY THE FED WILL VERY LIKELY RAISE THE RATE FOR THE FIRST TIME SINCE 2023. WHAT DOES HISTORY SHOW?
💸 The market assigns a 93% probability to the first rate hike since July 2023. The decision is at 14:00 and the press conference at 14:30.
🎯 Since 2008, whenever expectations have been this high, the FED has delivered without exception.
🔸If today it decided to keep it unchanged, it would be a surprise on the rate side, although the market reaction would depend on the message about future hikes.
🔸The particular detail that makes this unique: Warsh was appointed by Trump just a few months ago with the expectation that he would LOWER rates.
🔸And his first move at the head of the FED will be exactly the opposite.
What historically happened after the first rate hike of a cycle?
▪️ In the 7 episodes since 1988, the #SP500 fell on average 4.0% in the following 6 weeks.
▪️ But it RECOVERED ALL of that loss in the next 5 or 6 weeks.
▪️ At 6 months, average performance was +4.0%.
▪️ At 12 months, +9.0%, with a positive return in all episodes except 2022.
🧨 The subsequent declines after rate hikes were historically excellent buying opportunities. The scare is in the first few weeks, not during the year.
📍 The scenarios handled by JP Morgan’s trading desk for today:
▪️ No hike: the SP500 DOWNS between 1.25% and 1.75% because they expect it to signal FUTURE rate hikes
▪️ 0.25% hike with a signal that it would be the ONLY rate hike: the SP500 RISES between 0.50% and 1%
▪️ 0.25% hike signaling “materially higher” rates: the SP500 falls between 1% and 2%
📍 What the market would punish wouldn’t be the hike itself, but the message that many more are coming. $BTC $ETH $SPYB
