FOMC Keys: Dot-Plot, Rate-Cut Expectations & More

Wednesday, March 20th, 2024

Welcome to Hump Day, where market participants await the report from the Federal Open Market Committee (FOMC) today at 2pm ET, which will undoubtedly keep the Fed funds rate unchanged at 5.25-5.50%, for the sixth-straight FOMC meeting going back to July of last year. The next meeting takes place April 30/May 1, which is expected to keep levels steady once again, before beginning to cut interest rates as of this year’s June meeting.

The “dot-plot,” which comes out once per quarter, is a temporary road map of what the Fed is looking at in terms of future interest-rate moves. As of the most recent dot-plot we saw, in the December FOMC meeting, the Fed looking to make cuts to interest rates for the first time since four years ago (to the week). At that time, with the Covid pandemic crisis emerging, the Fed was very proactive in getting ahead of interest rates’ obstruction to the economy. It was roughly a year and a half later when analysts were calling for rate hikes, which didn’t start until March 2022.

Now the concerns — if they can be called that: the S&P 500 closed at a new all-time high yesterday — are on the other side: that the Fed won’t cut soon enough to avoid skidding the economy into recession. Yet economic data, even seasonally adjusted and accounting for anomalies, remains healthier than most had predicted by now. That said, most analysts expect the three-cut dot-plot will remain intact, but with the June meeting still fuzzy. There are only four FOMC meetings in 2024 following the June session, and one of those comes six weeks before the General Election.

Fed Chair Jerome Powell makes his usual press conference appearance following the FOMC release, giving more articulation to the monetary policy body’s overall thinking on the economy and how to adjust for an optimum +2% inflation rate. Currently, year-over-year headline CPI (aka the “Inflation Rate”) has been range-bound between +3.0-3.7% for the past several months. While it’s good these high rates haven’t caused an economic crash, we’re still higher than the Fed would like us to be, and current levels are proving sticky. We’ll have a report on the Fed and Powell’s words in this space after today’s close.

General Mills GIS reports fiscal Q3 earnings results ahead of today’s opening bell, beating estimates on both top and bottom lines — earnings of $1.17 per share on $5.1 billion in revenues amounted to positive surprises of +12.5% and +2.9%, respectively. Pre-market shares are up +4% on the news, adding to the +5.4% gains from the start of the year. The maker of Cheerios, Cocoa Puffs, Yoplait, Bisquick and Nature Valley brands demonstrated that breakfast is still a worthy expense among American households. For more on GIS’ earnings, click here.

Ollie’s Bargain Outlet OLLI also surpassed expectations this morning, in its pre-market fiscal Q4 report that saw earnings of $1.23 per share outpace projections by +6% on quarterly revenues of $648.95 million, which barely missed estimates by a smidge: -0.02%. Shares are down slightly here ahead of the opening bell, but aqre up +44% from one year ago. A play on discount retailers has so far been good for investors. For more on OLLI’s earnings, click here.

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