Hawkish Or Dovish? Fed’s Statement, Yellen, Could Set Tone After Rate Decision

The Fed is front and center, and with a rate hike pretty much a foregone conclusion, all eyes are on what Fed Chair Janet Yellen[1] might say. The futures market indicates a 98% chance of the Fed raising rates today.

Once the Fed makes its decision, the question becomes how the market might react and whether Yellen projects a hawkish or dovish tone about the future. The Fed is likely to be very careful about how it words things, and this could be one of Yellen’s most important press conferences. See below for more thoughts on what to watch as the Fed holds court.

Fed aside, could today be the day the Dow Jones Industrial Average (DJIA) tops 20,000 for the first time? It’s certainly getting close, and it’s quite the contrast from early this year when the index was well below 16,000. But early on, pre-market trading indicated a flat to slightly lower open, and action could be somewhat slow in the hours leading up to the Fed’s early afternoon announcement.

The tech sector took a leadership role yesterday, and there’s a lot of optimism about today’s scheduled meeting between technology industry leaders and President-elect Trump. Some of the companies sending executives to Trump Tower include
and Amazon (AMZN). Trump’s tough talk about trade when he was on the campaign trail raised concerns about how his policies might affect the sector, but today’s meeting seems to be an olive branch.

Retail sales for November rose 0.1%, the government said early Wednesday, compared with Wall Street analysts’ expectations for a 0.3% rise. Meanwhile, the November Producer Price Index (PPI) jumped 0.4%, a bigger gain than analysts had been expecting and the steepest increase in five months.

There’s a lot of nervousness about what might come out today from the Fed. Though stocks powered higher yesterday, VIX rose as market participants bought  protection. One big gainer was the CBOE Nasdaq 100 volatility index (VXN), which rose 3.32% to 14.33. The VIX, for its part, was up 6% at one point Tuesday, and climbed back above 13 early Wednesday. Another volatility gainer yesterday was the Crude Oil ETF Volatility Index, OVX, which climbed 3.5% to 31.35, though this remains well below the mid-50s, where OVX sat just before the recent OPEC meeting.

Watch for Fed’s Assessment of Economy: Though the big headlines later today could emphasize the Fed’s rate decision, investors might want to pay close attention to certain elements of the press release as well. After November’s meeting, the Fed said in its release that it expected economic activity will expand “at a moderate pace” and “labor market conditions will strengthen somewhat further.” The Fed also said it expected inflation to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Watch closely for any updates to that key language in today’s press release to get a better sense of any changes the Fed sees in the economy. And definitely take note of any indication Yellen might give at her press conference about the possible future course of rate hikes. Attention now turns toward the Fed’s plans for 2017.

Yields Up From Lows Across the Atlantic: While U.S. Treasuries drew most of the recent attention, European bond yields have also been on the rise lately, though there’s debate as to whether last week’s announcement by the European Central Bank (ECB) amounted to an extension or a rollback of the current stimulus. The ECB said it would stretch its bond buying out to next December. At the same time, however, it plans to reduce the monthly amount of purchases by next spring. Some analysts saw this as a sign of the ECB winding down the program, and that helped lift German 10-year yields, which now trade at around 0.36%, compared with negative readings at mid-year. Still, ECB President Mario Draghi[6] said the ECB’s decision doesn’t amount to a “tapering” of the stimulus program. Any sign of such a tapering could indicate economic optimism from the ECB.

DJIA Approaches Milestone: The Dow Jones Industrial Average (DJIA) is just a touch below 20,000, a level it’s never reached before. That raises the question of how the index has performed after taking out big numbers in the past. Well, in March 1999, when the DJIA first scored a close above 10,000, the index climbed to 11,000 by that May before tapering off for a few years and not topping 12,000 until 2006. And after hitting 15,000 for the first time in May 2013, the index climbed to well above 16,000 before the end of that year. Past performance, of course, can’t predict future returns, but perhaps it’s instructive to consider how the index performed around these milestones way back when.

TD Ameritrade® commentary for educational purposes only. Member SIPC.


  1. ^ Janet Yellen (www.forbes.com)
  2. ^ Apple (www.forbes.com)
  3. ^ Alphabet (www.forbes.com)
  4. ^ Facebook (www.forbes.com)
  5. ^ Microsoft (www.forbes.com)
  6. ^ Mario Draghi (www.forbes.com)

Source URL: Read More
The public content above was dynamically discovered – by graded relevancy to this site’s keyword domain name. Such discovery was by systematic attempts to filter for “Creative Commons“ re-use licensing and/or by Press Release distributions. “Source URL” states the content’s owner and/or publisher. When possible, this site references the content above to generate its value-add, the dynamic sentimental analysis below, which allows us to research global sentiments across a multitude of topics related to this site’s specific keyword domain name. Additionally, when possible, this site references the content above to provide on-demand (multilingual) translations and/or to power its “Read Article to Me” feature, which reads the content aloud to visitors. Where applicable, this site also auto-generates a “References” section, which appends the content above by listing all mentioned links. Views expressed in the content above are solely those of the author(s). We do not endorse, offer to sell, promote, recommend, or, otherwise, make any statement about the content above. We reference the content above for your “reading” entertainment purposes only. Review “DMCA & Terms”, at the bottom of this site, for terms of your access and use as well as for applicable DMCA take-down request.

Acquire this Domain
You can acquire this site’s domain name! We have nurtured its online marketing value by systematically curating this site by the domain’s relevant keywords. Explore our content network – you can advertise on each or rent vs. buy the domain. Buy@TLDtraders.com | Skype: TLDtraders | +1 (475) BUY-NAME (289 – 6263). Thousands search by this site’s exact keyword domain name! Most are sent here because search engines often love the keyword. This domain can be your 24/7 lead generator! If you own it, you could capture a large amount of online traffic for your niche. Stop wasting money on ads. Instead, buy this domain to gain a long-term marketing asset. If you can’t afford to buy then you can rent the domain.

About Us
We are Internet Investors, Developers, and Franchisers – operating a content network of several thousand sites while federating 100+ eCommerce and SaaS startups. With our proprietary “inverted incubation” model, we leverage a portfolio of $100M in valued domains to impact online trends, traffic, and transactions. We use robotic process automation, machine learning, and other proprietary approaches to power our content network. Contact us to learn how we can help you with your online marketing and/or site maintenance.