Latest / Markets with Megan: A Quick Financial Markets Update / FOMC Subtle Hints and Market Reactions | Episode 120 | 04-10-2024

Transcript

FOMC Subtle Hints and Market Reactions | Episode 120 | 04-10-2024 · Markets with Megan: A Quick Financial Markets Update

• 0:02
  Speaker 0: Unfortunately, today it is Wednesday, april 10th, and we now have a second piece of our economic data report that is fueling this sell-off in Wall Street.
• 0:11
  Speaker 0: What we got this afternoon is the FOMC minutes from their March meeting.
• 0:17
  Speaker 0: This is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:21
  Speaker 0: Let's dig into what happened in these minutes and why the market's selling off on this.
• 0:26
  Speaker 0: The Federal Reserve officials have been very vocal over recent weeks and being what we consider dovish, stating that interest rate cuts are expected this year.
• 0:36
  Speaker 0: The market's like that.
• 0:38
  Speaker 0: The market's been pricing in three, four at the beginning of the year, six rate cuts for this year.
• 0:42
  Speaker 0: But now we're seeing, after this morning's hotter than inflation report and some of the comments that came out of that meeting, this is a lot more unclear than I think investors that investors see, and I think that's why you're seeing equity markets sell off today when we look at the actual minutes from the meeting.
• 1:02
  Speaker 0: So this is everything that's talked about in the meeting, not just the brief statement that comes out after the meeting.
• 1:07
  Speaker 0: There was a lot of comments about officials being uneasy about what's going on inflation.
• 1:13
  Speaker 0: In fact, they mentioned that there would be some unevenness as inflation returns to their target.
• 1:18
  Speaker 0: They see upside risk to inflation because of financial conditions, their uncertainty about this persistence of high inflation.
• 1:26
  Speaker 0: And then, from the growth perspective, they discussed how they saw economic growth slowing in 2024 compared to 2023.
• 1:35
  Speaker 0: Now these are things that the market is now very confused on when we can get Fed rate cuts.
• 1:41
  Speaker 0: Right now, the expectation is for one, maybe two, possibly before the end of the year, but pushed out into the second half of the year.
• 1:49
  Speaker 0: That inflation data definitely did scare investors this morning, and then this lack of clarity from the Fed is not helping that pessimism in the market.
• 1:58
  Speaker 0: One other data note about today was we did get a reopening of the 10-year Treasury note auction and we've talked in the past about how auctions have been kind of dicey as far as demand for these auctions, and this was a very poor auction.
• 2:13
  Speaker 0: We saw the yield come out at the higher end of the range.
• 2:18
  Speaker 0: The bid-to-cover ratio was extraordinarily low.
• 2:20
  Speaker 0: It was the lowest we've seen since December of 2022.
• 2:23
  Speaker 0: These are all things that is fueling this risk-off sentiment in the markets we've seen since December of 2022.
• 2:25
  Speaker 0: These are all things as is fueling this risk off sentiment in the markets today.
• 2:28
  Speaker 0: We'll be back tomorrow where we'll get our other another inflation reading, we'll get the producer price index so we'll have some more information for about inflation.
• 2:36
  Speaker 0: Then If you have any questions or comments, please feel free to reach out to podcasts at verdence dot com.
• 2:41
  Speaker 0: Thank you.