Federal Reserve's Final 2023 Meeting: FOMC's Economic Projections Crucial, Dot Plot Weeds Out Hawks, Doves
Portfolio Pulse from Piero Cingari
The Federal Reserve's final meeting of 2023 is anticipated to provide crucial economic projections and a dot plot indicating future interest rate expectations. The consensus is that the rate-hiking cycle has peaked, with rates expected to stabilize between 5.25%-5.50%. Investors are focused on the FOMC's new economic projections and the dot plot for insights into the Fed's economic outlook. The September dot plot suggested a median rate of 5.6% by the end of 2023, which has not been realized, and a 50-basis-point reduction to 5.1% by the end of 2024, contrasting with market expectations of significant cuts to 4%-4.25%. A median dot projection above 4.9% for 2024 would be seen as hawkish, while a cut to 4.6% or below would be interpreted as dovish. The iShares 20+ Year Treasury Bond ETF (TLT) has risen 12% since the November FOMC meeting, reflecting market expectations for lower rates.

December 12, 2023 | 6:52 pm
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The iShares 20+ Year Treasury Bond ETF (TLT) has increased by 12% since the last FOMC meeting, indicating market anticipation of lower interest rates in the future. The upcoming Fed meeting and subsequent economic projections could further influence TLT's performance.
While TLT has already seen a significant increase, the Fed's meeting could either reinforce the current trend or introduce volatility depending on how the projections align with market expectations. The ETF's performance is closely tied to long-term interest rate expectations, which are directly impacted by Fed policy decisions.
CONFIDENCE 75
IMPORTANCE 70
RELEVANCE 80