QQQs -22bps. Fed overall seemed to be a non-event. VK covered it well, as always:
The 2pmET statement contained a hawkish language change around inflation in that it omitted the line “inflation has made progress toward the committee’s 2% objective”. However, Powell’s press conf. remarks were dovish, and he basically said that the statement adjustment should not be interpreted as a hawkish shift. During the press conf., Powell acknowledged that inflation has eased significantly over the last two years, moving much closer to the 2% goal (although remains “somewhat elevated”). Meanwhile, inflation expectations “remain well anchored”. More specifically, it was noted that the most recent inflation data has been encouraging, and it is expected that further disinflationary progress will occur (OER/housing inflation now seems to be drifting lower at a fairly steady clip).
As long as nothing changes current fed trajectory of easing (45-50bps cuts expected this year) and yields remain subdued, we think it will continue to be a supportive macro environment for equities. But macro releases will continue to play an outsized role in potentially changing that and next on the docket is PCE on Friday and NFP next week.
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