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December 14, 2022 at 03:37 PM
For investors trying to gauge levels of hawkishness at the Federal Reserve, Wednesday was an example of words carrying more weight than actions.
As part of its rate decision, Fed officials projected that rates will rise at least another half a percentage point next year. That was enough to send stocks lower and lift Treasury yields higher — moves the Fed itself might welcome.
Since the central bank’s last policy decision on Nov. 2, the S&P 500 had climbed almost 7% through Tuesday, marking the best intra-meeting performance since June 2020.
A U.S. Financial Conditions Index kept by Goldman Sachs Group Inc. slipped 0.8% for the largest easing between Fed meetings since August 2009.
“Slower growth forecasts, yet more hikes. That’s not a great combination for markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “The bigger uncertainty for markets right now is growth, not the Fed.”
Chair Jerome Powell’s comments at the news conference following the rate decision further darkened the market’s mood. “He doesn’t sound like happy Brookings Powell,” said Dennis DeBusschere, founder of 22V Research. “More like sad Jackson Hole Powell.”
Other Views on Fed’s Latest Announcement
Here’s other analysts were saying:
Steve Sosnick, chief strategist at Interactive Brokers: “The red-lined statement was remarkable for its last of red lines — only the rate itself and a slight modification to the effect of global concerns on inflation. The higher dot plot and essentially unchanged statement is a pushback against the market’s anticipation of a peak, pause, and pivot in 2023.”
