Economic projections looking more hawkish; stocks add to gains
Seeking Alpha
Published Mar 21, 2018 02:19PM ET
Economic projections looking more hawkish; stocks add to gains
- The Cliff's Notes on the Fed's updated economic projections: Stronger growth, lower unemployment, modestly stronger inflation, and thus a higher Fed Funds rate.
- GDP this year is now seen growing 2.7% vs 2.5% previously. In 2019, growth of 2.4% is expected vs. 2.1% previously. 2020 remains at 2.0%.
- The unemployment rate is now seen falling all the way to 3.6% in 2019 vs. 3.9% previously. It's seen remaining at 3.6% in 2020 vs. previous expectations for a bounce back to 4.0%.
- Core inflation is still anticipated at 1.9% this year. For 2019 and 2020, it's seen at 2.1% vs. 2.0% previously.
- This December's Fed Funds projection remains at 2.1% (suggesting two more hikes). 2019 and 2020 are looking more hawkish though, with Fed Funds expected to end 2019 at 2.9% (vs. 2.4% previously) and 2020 at 3.4% vs. 3.1% previously.
- Bonds have turned modestly lower since the news hit, with TLT now off 0.25%.
- Stocks have roughly doubled their pre-announcement gains, with the Dow (NYSEARCA:DIA) now up more than 200 points. The S&P 500 (NYSEARCA:SPY) is ahead 0.55%, and the Nasdaq (NASDAQ:QQQ) 0.65%.
- The Powell press conference begins in less than 15 minutes. Stick with Seeking Alpha for coverage.
- Previously: Fed hikes by another 25 basis points, signals two more moves this year (March 21)
- Now read: What Gamblers Can Teach The Buy-And-Hold Crowd
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