Presented by The PensionmarkMeridien Team, March 26, 2024
With the Federal Reserve (Fed) meeting moving markets last week, I am reaching out with a quick update.
As expected, the Fed kept interest rates unchanged last week at its March policy meeting. Federal Reserve Chair Jerome Powell’s commentary during the Q&A session indicated three rate cuts to come this year, which boosted the major stock indexes.
Overall, the S&P 500 rose by 2.29%1, the Nasdaq 100 tacked on 2.98%2, and the Dow Jones Industrial Average increased by 1.97%3 for the week.
FED: RATES UNCHANGED, INFLATION IN FOCUS
As expected, the Fed left rates unchanged at last week’s policy meeting. Powell also struck a dovish tone for the future direction of Fed interest rate policy.
According to Powell, the Fed will continue to seek confirmation that inflation readings are moving toward the 2% Fed target, as the market has digested hotter-than-expected inflation readings in recent months.
“The other thing is, in the second half of the year, you had some pretty low readings, so it might be harder to make that 12-month window forward,” Powell said4.
Nonetheless, we’re looking for data that confirm the low readings that we had last year. And give us a higher degree of confidence that what we saw was really inflation moving sustainably down to 2%.”
THREE RATE CUTS IN 2024, ACCORDING TO “DOT PLOT”
The Fed’s dot plot, which consists of anonymous data from the 19 officials that comprise the Federal Open Market Committee (FOMC), indicated that the committee has penciled in three quarter-point cuts in 2024. You can see the Fed Dot Plot here5.
There are only six Fed policy meetings left in 2024, so these projected rate cuts would have to start happening soon. Will upcoming inflation data cooperate and warrant such cuts? That’s the million-dollar question.
At the end of last week, probabilities favored the first Fed rate cut occurring at the June Fed meeting, with a 75.6% probability, according to the CME FedWatch Tool6.
The Fed will next meet in May.
HOME SALES BOUNCE
Existing home sales surged by 9.5% in February – or perhaps more accurately, one could say these sales “bounced” from anemic levels.
According to data7 from the National Association of Realtors, total sales of existing homes (including single-family houses, townhouses, condominiums, and co-ops) increased by 9.5% month-over-month in February to a seasonally adjusted annual rate of 4.38 million. However, sales declined by 3.3% compared to the same month last year, dropping from 4.53 million in February 2023.
It appears that buyers have finally come around to mortgage rates near present levels, with the average 30-year fixed mortgage near 7%8 last week. Present levels are much better than the near-8% pricing on the 30-year fixed mortgage back in October.
WRAPPING THE WEEK UP
Major U.S. stock indexes have kept at their recent bullish run, getting the catalyst they needed to break out of a two-week quiet period of consolidation.
Inflation definitely remains front and center as 23-year-high interest rates affect our everyday lives. Long-term investing helps in weathering this storm as wealth compounds over time, lessening the “pinch” that so many Americans are coping with right now.
This Friday’s Core Personal Consumption Expenditures (PCE) reading will be the long-awaited piece of data on inflation this week. It measures consumer goods and services pricing and is the Fed’s preferred metric on inflation — market watchers will be tuning in!
We are always here as a resource for you.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
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Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).
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This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Citations:
1. Trading View, March 23, 2024
2. Trading View, March 23, 2024
3. Trading View, March 23, 2024
4. CNBC, March 20, 2024
5 Real Investment Advice March 21, 2024
6. CME Group, March 25, 2024
7. NAR Realtor, March 21, 2024
8. Mortgage News Daily, March 24, 2024
Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).