Market Leans Dovish After Fed Statement
The implied probability of a September rate increase from the Federal Reserve, based on 30-day Fed funds futures prices, dropped to 0% following Wednesday’s dovish policy statement. In recent weeks, the implied probability for a September rate increase was hovering between 17% and 21%.
GDP Coming Thursday
While the market has another big hurdle to cross in the form of the latest reading of U.S. GDP Thursday morning, in addition to Wednesday’s Fed statement, we recently outlined other reasons to keep an open mind about bullish outcomes.
Bull/Bear Guideposts
A few reasonable S&P 500 guideposts relative to improving bullish probabilities include 2096, 2107, 2116, and 2134. Each push above a guidepost level improves the odds for the bullish case. Below these levels, the expression “the market has some work to do” applies. The S&P 500 closed at 2108 Wednesday, above both 2096 and 2107, meaning bulls and bears will be watching 2116 and 2134 in the coming days.
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