Today, the Federal Reserve will meet to discuss its monetary policy. It announces its rate decision on Wednesday at 2 p.m. Markets are nearly 100% certain that rates will not change. Despite their strong expectations, will markets rise or fall after the FOMC statement?
The long-term U.S. Treasury bond prices are dipping, ahead of this crucial meeting. TLT stock traded between $86 - $87. In the last week, the bond ETF fell by 0.88%. The rising yields are more likely reacting to the Strait of Hormuz still mostly shut down. Energy inflation risks are increasing rapidly, as the longer ships cannot pass through the Strait.
Energy markets will likely move sharply after the rate decision. The Fed Chair, Jerome Powell, might voice concerns about the energy market. Powell might forecast WTI crude prices staying at $95 - $115 per barrel in the near-term. That would help shares of Exxon Mobil (XOM) or Devon Energy (DVN) to rebound.
Gold (GLD) lost its bullish direction. A hawkish Fed, ready to raise rates to fight inflation amid strong job conditions, would strengthen the U.S. dollar (UUP). That would send gold and silver (SLV) lower.
The technology sector enjoyed a historic rally for the month ahead of the Fed meeting. QQQ stock closed at $664.23, a new high. The chances are low that the Nasdaq would fall by much. Buying momentum might send the index even higher as investors continue to react to strong AI hardware sales.
