Wednesday, April 29, 2015
FOMC Statement No Big Surprise; Treasuries and Equities Still Weak
The language in the FOMC statement was a tad soft. The indication that ‘economic growth had slowed during the winter month’ was quickly indicated to have reflected ‘in part reflected transitory factors’. The indication ‘winter months’ also provides for possibly a better assessment thereafter. The March nfp was noted in ‘the pace of job gains moderated’, but ‘underutilization of labor resources was little changed’. Household spending decline was mentioned, but that was against notification that ‘household real income rose strongly’ and that consumer sentiment remains high (not marking down sentiment following the weaker than expected consumer confidence reported yesterday). No surprises with references to housing or inflation, though inflation could have been afforded a slightly better account.
In all the statement was mildly more dovish than I would have imagined, but not out of line with what market participants were expecting and certainly not a complete surprise as was the March FOMC results. Treasury prices recovered from earlier lows, but don’t seem to be holding those post-FOMC recovered levels. Likewise, equity prices recovered somewhat from greater losses, but do not look at all constructive. Oil prices gave some of the $1.60 gain back, but not much. In all, today looks bearish for equities and fixed income and we would not expect any strong recovery in either over the next 24 hours.