March 19, 2019 Fed Meeting Yet to Start; Markets Can't Wait by Lester Murray

The FOMC will begin its regularly scheduled meeting later today, but financial markets are already looking ahead. Those in the know don't expect any rate changes, but many are looking for revised plans that could possibly bring an end to planned balance sheet reduction. The reversal of massive bond purchases accomplished through the policy tool known as Quantitate Easing has had the effect of tightening monetary conditions in a way not related to the policy rate. This week's meeting is not expected to produce any rate changes, but a new Summary of Economic Projections, and a new  "dot-plot", might provide some insight into how policy-makers see things playing out. Observers should have their grains-of-salt ready.

In the meantime, equity markets seem to be anticipating something they might like, while bond investors might be bracing for something they might not. As always, the post-meeting statement, in addition to Chairman Powell's Press Conference, will be rigorously scrutinized for clues. No doubt, some will be found even if they aren't really there. The Ten-Year's yield has moved up a couple of basis points, but that still leaves it pretty close to 2.60%.  Factory Orders have already come in with some disappointing data for the data-driven Fed with Durable Goods Orders also failing to meet expectations.