What To Watch When FOMC Minutes Drop: Pain For Stocks, Bonds Looms If Market Expectations Diverge With Fed Reality
Portfolio Pulse from Piero Cingari
The Federal Reserve will release the minutes of the May FOMC meeting, which may impact stocks and bonds if market expectations diverge from the Fed's reality. Investors will scrutinize the minutes for signs of divergence among FOMC members about the future path of interest rates. Assets such as SHY, TLT, SPY, and QQQ may experience volatility as a result.
May 23, 2023 | 4:34 pm
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NEUTRAL IMPACT
The QQQ Invesco Trust (QQQ) may experience volatility if the FOMC minutes reveal a realignment of market expectations regarding Fed rate cuts.
The recent stock market rally was partly fueled by growing investor expectations of Fed rate cuts. If the FOMC minutes reveal a realignment of these expectations, it may impact the stock market and cause volatility in the QQQ ETF, which tracks the Nasdaq-100 index.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 75
NEUTRAL IMPACT
The iShares 1-3 Year Treasury Bond ETF (SHY) is sensitive to Fed interest rate decisions and may experience volatility following the release of the FOMC minutes.
The FOMC minutes will provide insights into the Fed's interest rate decisions, which directly impact short-term Treasury bonds. As SHY is an ETF focused on 1-3 year Treasury bonds, it is sensitive to these decisions and may experience volatility if the minutes reveal any unexpected information.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 75
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) may experience volatility if the FOMC minutes reveal a realignment of market expectations regarding Fed rate cuts.
The recent stock market rally was partly fueled by growing investor expectations of Fed rate cuts. If the FOMC minutes reveal a realignment of these expectations, it may impact the stock market and cause volatility in the SPY ETF, which tracks the S&P 500 index.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 75
NEUTRAL IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) may react to remarks on inflation and growth following the release of the FOMC minutes.
The FOMC minutes will provide insights into the Fed's views on inflation and growth, which can impact long-term Treasury bonds. As TLT is an ETF focused on 20+ year Treasury bonds, it may react to any unexpected remarks on inflation and growth revealed in the minutes.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 75