Michael Reinking, CFA
Sr. Market Strategist

Yesterday the S&P 500 rallied >1.5% off session lows during Chair Powell’s press conference only to reverse all of those gains as it concluded to end the session down around a third of a percent. As widely expected, the Federal Reserve left rates unchanged but did announce that it would slow the pace of the balance sheet unwind dropping the monthly cap in Treasuries to $25B/mo from $60B/mo which was slightly more than expected. Chair Powell’s message was in line with his commentary from a couple of weeks ago, that the recent data suggests it will take longer to return inflation to target but that he believes rates are currently restrictive. His commentary was less hawkish then feared and there still seems to be an easing bias. He was given multiple opportunities to put the prospect of a rate hike on the table but never took the bait saying he believed that would be “unlikely”. Check out the Fed Recap for our full breakdown. Yields pulled back modestly while the USD weakened. Just after the close the Yen rallied sharply falling to ~154 in what appears to be the second intervention in a week some of that move unwound overnight. S&P futures have been moving modestly higher overnight currently trading ~0.6% above fair-value but remain well below yesterday’s highs.