FOMC Minutes: Patience Is The Key Word

US futures and European equity markets are reacting negatively as investors are wary about the US and China trade deal. It was pretty much given that only a negative surprise was going to have an impact on the markets when it comes to the trade negotiations saga because all the positive aspect was already priced in the market.Nonetheless, the US equity markets are as strong as they can be. In fact, theis approximately 74 points away from reversing all the losses from the previous quarter.

It is in this essence that today’s price action is going to be focused mainly on the Fed’s chairman speech. The FOMC minutes will be released later today and Jerome Powell, the Fed Chairman will be grilled on his future plans with respect to the monetary policy. Mr. Powell will have to continue to stress one keyword, “patience”.Looking at the economic docket, it becomes fairly clear that the numbers have not printed anything cheerful, but the chairman cannot afford to be overly cynical either.

The fact is that there is nothing in the economic data which warrants the Fed to shift their policy stance, and if there is a surprise on this front, the market participants would react harshly. I am not saying that the Fed isn’t going to increase the interest rate later this year. The argument for that may be strong, especially if we look at the above valuation chart. This can serve as a good excuse down the line and the Fed may press the interest rate hike button then.

With respect to the Fed's dot plot, I am expecting this to continue to deliver the committee's bias, more interest rate hike but a less hawkish picture as compared to the one in December. This is likely to change once the economy has sailed safely through the soft economic path of 1H.I was awarded a national award in 2010. I have worked with Bank of America in equity trading and with Bank of New York in hedge fund trading, I have...

Chill Forbes. It will be okay.

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