Tuesday, December 13, 2016

Potential Bullish Reaction To Fed Tomorrow

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*We reviewed several decades of market performance following the first or second rate hike after a series of cuts. Tomorrow's rate hike will be the second such hike.

*The findings show that on average markets are up the next day and next month.

*We expect bullish comments out of the Fed tomorrow by not raising their interest rate targets for 2017 but seeing more economic strength.

*With the amount of people typically assuming negative reactions to rate hikes in combination with positive Fed commentary, markets could have reason to keep rising.


We looked at the Fed's first or second rate hike going back through 1985. In 17 findings on average markets were up .3% that day and .3% overall over the next month. Combining that with our expectations for bullish Fed commentary on the economy we expect a positive outcome for markets (NYSEARCA:SPY).
First Couple Of Rate Hikes OK For Markets
Source: St Louis Fed

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