Last night on the globex open, the S&P 500 bid higher throughout the Asian and Euro sessions making high of 2050.00 just after 5:00 am CT and maintained a trade near those highs.
At the US regular trading hours open, the ESH15 traded at 2048.25 and sprung higher to an early print of 2052.25 before trading low the rest of the morning session down to 2035.50 before grinding higher into the FOMC announcement. Post Fed, the S&P took out the low trading down to 2031 and then set it’s sights on the highs and maintained a late day bid in the face of a $ 1 billion USD MOC (market-on-close) sell imbalance settling higher by 25 handles
Heard across the news wires today was the decision by the Federal Reserve to raise interest rates for the first time since 2006. Outside of that, Fedex which is seen as an economic barometer trimmed their forecast for next year.
From Barclays: Therefore, we expect markets to focus on forward-looking matters, including the anticipated pace of tightening, the updated set of economic projections, and the overall tone of today’s communications. While much of this messaging will come in the press conference to follow, the statement does speak to the committee’s expectation that the rate hike path will be gradual.
Credit Suisse: “We retain a USD-bullish view given the fact that so little has been priced in for the Fed’s hiking cycle. We think this Fed hiking cycle will be different from those in decades past where the “liftoff” marked an end to broader USD strength. Instead, we see some key differences in the current macro backdrop that suggest broad-based USD strength can continue,”
Wells Fargo (N:WFC) reportedly became the first to raise their prime rate (benchmark lending rate) to 3.5%. Banks don’t often move that quick on rate changes. The fact rates are going up will obviously mean they’ll be quicker to keep that margin. They won’t be changing their standard deposit rate though, so savers are out of luck
JP Morgan
“The Fed raised rates today for the first time since 2006, lifting the funds rate target range to 0.25-0.50%. The interest rate forecast “dots” came down, but only slightly. The statement was generally dovish in tone. In particular the FOMC stated that “In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal.” In view of its forecast of inflation this implied “only gradual increases” in the funds rate. In fact, “gradual” was noted twice in the statement.
Deutsche Bank (DE:DBKGn)
“December post-meeting communique struck an upbeat tone with respect to the economic outlook. For example, the December statement repeated that household and business spending “have been increasing at solid rates” while the labour market has improved further. The inflation language noted that market-based measures “remain low” and survey-based measures “edged down”. This latter is important because it tells us the Fed is slightly more concerned about inflation expectations.”
Heading into tomorrow, the calendar will start to focus on this week’s quad witching as Thursday’s stats are weak while the S&P could stand to back and fill before going higher as the Friday stats are positive having closed higher in 22 of the last 31 years. I don’t know about anyone else but I am glad that the Fed meeting is OVER!
Floor Pivots For Tomorrow’s RTH E-mini
R3 2130.00
R2 2092.25
R1 2077.75
PP 2054.50
S1 2040.00
S2 2016.75
S3 1979.00