Market Update May 2024
1 May 2024Federal Reserve policy announcements and outlook
The Federal Reserve announced today that it would hold rates steady at the current range of 5.25% to 5.5%. It also announced that it would lower the Treasury securities monthly redemption cap from $60B to $25B.
Wall Street participants were hoping for a rate cut. However, after three months of slightly higher inflation, continued strong job gains, and a low unemployment rate, the Fed felt it needed to hold rates steady due to lack of further progress being made on inflation and stable economic growth.
Wall Street did perceive the announcement by the Fed of a lower pace of liquidity withdrawal from the system as positive.
What this means for us
The Fed continues a cautious approach to lowering interest rates based on largely positive economic data. This environment is going to require more patience on our part before we see another meaningful rise in the U.S. stock market. As such, market participants will continue to be sensitive to inflation and jobs data, looking for signals as to what the Fed will do next. We will stay the course in our positioning for now until the market allows for more opportunity.
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