Increased uncertainty

The Fed meeting was not so uneventful after all. Rates did not move, as expected, but the FOMC official statement read: “uncertainty around the economic outlook has increased”. The Fed’s treasury portfolio runoff will be decreased from $25Bn to $5Bn, and the Fed’s oficial projections (see below) show lower growth and higher inflation (stagflation?). Although the new “dot plot” was published and showed little to no change in rates for the rest of 2025, Mr Powell mentioned that 2 rate cuts are still on the table for the year, which sent the indices up. The dollar weakened slightly vs the Euro. Risk on was back with vengeance, at least for yesterday, with Tech and growth rebounding nicely. Yet to be seen if we have seen the end of the correction for the US, or this is just a stop in the detox process.

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