Fed Selloff, Part Two💸

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Fed Selloff, Part Two

Yesterday, we discussed the effects of Federal Reserve Governor Lael Brainard’s comments regarding monetary policy on the market. Investors were alarmed as her comments showed that the Fed was moving quicker with policy than expected, which sent the markets tumbling yesterday. Things discussed were interest rates, but mostly the Fed’s asset portfolio, and provided with further clarification on Wednesday.

During the Fed minutes, the officials agreed that they would start reducing their balance sheet by $95 million per month, starting in May. This is a major switch from the Fed’s recent ultra-easy policy and double the rate of the last time the Fed has done this. It shows that the Fed is heavily committed to slowing down the inflation crisis, and they also look to interest rates for this. Originally, the Federal Reserve looked to raise interest rates by a quarter of a percentage point 4 times over this year, with one of them already being implemented in March. With the situation becoming dire, Fed officials are looking to raise rates by half of a percentage point, and the only thing preventing this from happening in March was Ukraine situation. Due to this new strategy, the markets fell once again as they are still adjusting to the new approach. Tech continued to get battered, with the NASDAQ down by more than 2 percent and some of its main companies posting big losses to end the day. Analysts expect the markets to continue its volatility as these are uncharted waters for the stock market now, but we always know this can be a buying opportunity. Tech names look like they are already discounted, but you might be able to grab them at an even lower price.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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Higher Rate Households 📈

The recent Fed decision to pause rates has left the federal funds rate at its highest level since 2000.

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