Latest / Markets with Megan: A Quick Financial Markets Update / Fed Day Fallout | S3 E 143 | 04-29-26

Transcript

Fed Day Fallout | S3 E 143 | 04-29-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The Fed came in a bit hawkish today.
• 0:03
  Megan Horneman: This is Wednesday, April the 29th, and this is Markets with Megan.
• 0:06
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• 0:09
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• 0:10
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• 0:21
  Megan Horneman: Today was a big day.
• 0:22
  Megan Horneman: It was Fed Day, and it was also the last day where Federal Reserve Chairman Jerome Powell would sit as the head of the Federal Reserve.
• 0:29
  Megan Horneman: Now, as expected, they did not make any changes to interest rates.
• 0:33
  Megan Horneman: They kept interest rates unchanged.
• 0:36
  Megan Horneman: But there was quite a few people who disagreed with that change.
• 0:39
  Megan Horneman: Not necessarily the fact that they didn't cut interest rates, but some of them wanted the Fed to remove that easing bias in their language.
• 0:50
  Megan Horneman: So three of them wanted to remove the easing bias, and actually one committee member wanted them to cut interest rates.
• 0:57
  Megan Horneman: This is the first time since 1992 that we had four dissenters in the Federal Reserve Committee at a meeting.
• 1:04
  Megan Horneman: Now let's dig into some of the details in the statement.
• 1:12
  Megan Horneman: They said that in the past statement, it said inflation was somewhat elevated.
• 1:18
  Megan Horneman: In this statement, they removed the word somewhat and just said it was elevated.
• 1:23
  Megan Horneman: And I know it may sound silly, but the markets react on just simple word changes in these statements.
• 1:30
  Megan Horneman: They did also mention that the rise in energy prices is impacting their viewpoint.
• 1:35
  Megan Horneman: Now, when they go through their press conference, this is where we really like to get more details on what they're thinking.
• 1:42
  Megan Horneman: Um, what's interesting is the Federal Reserve Chairman has decided to stay on the board until his term ends in 2028.
• 1:50
  Megan Horneman: Now, Kevin Walsh is on his way to be nominated by Congress.
• 1:54
  Megan Horneman: He will take place in the next meeting, but the federal chairman, Federal Reserve Chairman, as of right now, Jerome Powell, has a seat as a governor until 2028, but his cer his term as chairman will end on May 15th.
• 2:09
  Megan Horneman: He stated that he is concerned about the legal attacks that have been consistently happening against the Fed, and he wants to stay on.
• 2:18
  Megan Horneman: He hasn't said until when.
• 2:20
  Megan Horneman: He said he will stay on for some time.
• 2:22
  Megan Horneman: He wants to make sure that they are conducting monetary policy without political factors.
• 2:27
  Megan Horneman: So that is interesting.
• 2:29
  Megan Horneman: He has mentioned that there is only one chairman that will be Wush, and that he will remain on, but will remain sort of a silent governor.
• 2:39
  Megan Horneman: Um, the uh things in the market that changed, um, first of all, we're looking at the Fed funds futures.
• 2:46
  Megan Horneman: There's about a 95% chance of no changes in interest rates this calendar year.
• 2:52
  Megan Horneman: We've been stating this for quite some time.
• 2:55
  Megan Horneman: Um, there is a 50-50 chance of either a rate cut, a rate hike or no change at all by July of the middle of next year, 2027.
• 3:05
  Megan Horneman: So kind of a big move there.
• 3:06
  Megan Horneman: The markets aren't really liking this.
• 3:08
  Megan Horneman: Equities are weaker today.
• 3:10
  Megan Horneman: Um, we're looking at um gold weaker, the dollar is higher because interest rates are higher.
• 3:16
  Megan Horneman: In fact, we're seeing the two-year yield up 11 basis points on the day.
• 3:21
  Megan Horneman: That's the biggest move in the two-year yield, which tends to be very correlated to the Fed funds' futures.
• 3:27
  Megan Horneman: It's the biggest move we've seen on a Fed day since um January of 2022, and that was right before we started a hiking cycle with the Fed.
• 3:36
  Megan Horneman: So nothing really surprises us out of this meeting today because we have been warning that the Fed likely will not cut interest rates.
• 3:43
  Megan Horneman: We're not yet ready to say they're gonna have to hike this year, but if the Strait of Hormuz continues to remain shut, we have the supply chain disruptions, oil prices are higher again today.
• 3:54
  Megan Horneman: This will likely lead into the inflation data that we get in the coming months.
• 3:59
  Megan Horneman: So there is a chance that they may have to take action.
• 4:03
  Megan Horneman: Um we aside from this, there's really no other change to our view right now.
• 4:08
  Megan Horneman: Yields, as we said, bonds are selling off on this.
• 4:11
  Megan Horneman: Inflation expectations are also a bit higher.
• 4:14
  Megan Horneman: So we'll continue to monitor the markets and see if there's any buying opportunities in here.
• 4:18
  Megan Horneman: But again, we are cautious.
• 4:19
  Megan Horneman: It's also a huge week for earnings when it comes to the SP 500.
• 4:23
  Megan Horneman: So stay tuned.
• 4:24
  Megan Horneman: We'll be back.
• 4:25
  Megan Horneman: And if you want a history of our podcast, you go to marketswithmaking.fm.
• 4:28
  Megan Horneman: Thank you.