Latest / Markets with Megan: A Quick Financial Markets Update / 040: Federal Reserve Symposium Insights with Megan Horneman 08-25-23
Transcript
- 0:04Megan Horneman: Hello, I'm Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
- 0:08Megan Horneman: Today, in our segment of Markets with Megan, we're going to talk about the Federal Reserve and the comments they made today at their annual symposium in Jackson Hole, Wyoming.
- 0:17Megan Horneman: The markets have been waiting for this meeting all week and the Fed really didn't make any big surprises with their comments.
- 0:25Megan Horneman: They did make mention that they're prepared to raise rates further if it's necessary, that there's still a long way to go from their inflation target and they did not budge on the 2% inflation target.
- 0:37Megan Horneman: They also mentioned that their upcoming meetings they would proceed cautiously so that basically an our opinion means that they will assess each meeting with the data that they have and doesn't necessarily mean that they'll continue to raise at every meeting.
- 0:52Megan Horneman: The markets liked it.
- 0:54Megan Horneman: Today the bond markets are basically unchanged, but the equity markets are rallying because it's very different than the comments they made last year.
- 1:00Megan Horneman: Last year they were very hawkish.
- 1:02Megan Horneman: They even mentioned that they would have to take forceful and rapid steps to quality inflation.
- 1:06Megan Horneman: This year it's a little bit more balanced.
- 1:09Megan Horneman: We think, going forward, that the Fed will still probably have one more rate hike this year.
- 1:12Megan Horneman: We think that in the near term there is risk that inflation could temporarily rise again because we've seen the uptick in energy prices, but then we do think that they're going to stay higher for longer.
- 1:23Megan Horneman: That's something that the market has to adjust to.
- 1:25Megan Horneman: We still think there's a lot of room for volatility because fundamentals are still very challenged here in the US and globally.
- 1:32Megan Horneman: Then the last thing we'll mention is from the inflation side.
- 1:35Megan Horneman: The Fed needs to pay attention to is today we got the University of Michigan consumer sentiment survey as well, and we did see that inflation expectations for consumers in the near term and also the longer term ticked up.
- 1:47Megan Horneman: That's something the Fed's going to pay attention to, because once consumers start thinking there's inflation ahead that can actually feed on its inflation itself as they do, they'll spend more now in the anticipation that prices may rise.
- 2:00Megan Horneman: So we'll keep an eye on this.
- 2:01Megan Horneman: We think that the Fed probably will stay on hold at the next meeting in September.
- 2:05Megan Horneman: It will be data dependent, but then we do still do think there's another rate hike, maybe in November or December.
- 2:10Megan Horneman: That's all we have today.
- 2:11Megan Horneman: If you have any questions or comments, please feel free to reach out to podcasts at verdence dot com.
- 2:16Megan Horneman: Thank you.