Fed Day Fallout | S3 E 143 | 04-29-26

The Federal Reserve held interest rates steady, but the tone of today’s meeting was more hawkish than markets expected.

In this episode of Markets with Megan, Megan breaks down the latest Fed decision, the notable dissent within the committee, and why small wording changes in the Fed statement can have a big impact on markets. She also discusses rising energy prices, inflation concerns, higher bond yields, and why the path for rate cuts looks increasingly uncertain.

In this episode,:

• Why the Fed left rates unchanged
• The significance of multiple Fed dissenters
• What changed in the Fed’s inflation language
• Why rising energy prices matter for monetary policy
• How Fed funds futures shifted after the meeting
• The market reaction across equities, bonds, gold, and the dollar
• Why Verdence remains cautious heading into more inflation data and earnings

Stay tuned for more market updates from Megan Horneman, Chief Investment Officer at Verdence Capital Advisors.

For more episodes and the full podcast history, visit:
MarketsWithMegan.FM

#MarketsWithMegan #FederalReserve #FedDay #InterestRates #Inflation #JeromePowell #BondYields #MarketVolatility #EconomicData #Investing #MarketUpdate #WealthManagement #VerdenceCapitalAdvisors

Disclaimer:  material was prepared by Verdence Capital Advisors, LLC (“VCA”). VCA believes the information and data in this document were obtained from sources considered reliable and correct and cannot guarantee either their accuracy or completeness. VCA has not independently verified third-party sourced information and data. Any projections, outlooks 
or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. This material is being provided for informational purposes only and is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice. Past performance is not a guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance 
that the future performance of any specific investment, investment strategy, or product or anynon-investment related content, made reference to directly or indirectly in these materials will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any 
discussion or information contained in this report serves as the receipt of, or as a substitute for, personalized investment advice from VCA. Due to various factors, including changing market conditions and/or applicable laws, the c...

Transcript

Hawkish Tone And Quick Subscribe

Megan Horneman 0:00

The Fed came in a bit hawkish today. This is Wednesday, April the 29th, and this is Markets with Megan. If you like this podcast, just subscribe to it. There's an alarm bell down at the bottom. You can also share it with any friends, family, or colleagues, anybody who's interested in the daily economic data that we get, what it means for your investments, and what it means for the markets. Today was a big day. It was Fed Day, and it was also the last day where Federal Reserve Chairman Jerome Powell would sit as the head of the Federal Reserve. Now, as expected, they did not make any changes to interest rates. They kept interest rates unchanged. But there was quite a few people who disagreed with that change. Not necessarily the fact that they didn't cut interest rates, but some of them wanted the Fed to remove that easing bias in their language. So three of them wanted to remove the easing bias, and actually one committee member wanted them to cut interest rates. This is the first time since 1992 that we had four dissenters in the Federal Reserve Committee at a meeting. Now let's dig into some of the details in the statement. They said that in the past statement, it said inflation was somewhat elevated. In this statement, they removed the word somewhat and just said it was elevated. And I know it may sound silly, but the markets react on just simple word changes in these statements. They did also mention that the rise in energy prices is impacting their viewpoint. Now, when they go through their press conference, this is where we really like to get more details on what they're thinking. Um, what's interesting is the Federal Reserve Chairman has decided to stay on the board until his term ends in 2028. Now, Kevin Walsh is on his way to be nominated by Congress. He will take place in the next meeting, but the federal chairman, Federal Reserve Chairman, as of right now, Jerome Powell, has a seat as a governor until 2028, but his cer his term as chairman will end on May 15th. He stated that he is concerned about the legal attacks that have been consistently happening against the Fed, and he wants to stay on. He hasn't said until when. He said he will stay on for some time. He wants to make sure that they are conducting monetary policy without political factors. So that is interesting. He has mentioned that there is only one chairman that will be Wush, and that he will remain on, but will remain sort of a silent governor. Um, the uh things in the market that changed, um, first of all, we're looking at the Fed funds futures. There's about a 95% chance of no changes in interest rates this calendar year. We've been stating this for quite some time. Um, there is a 50-50 chance of either a rate cut, a rate hike or no change at all by July of the middle of next year, 2027. So kind of a big move there. The markets aren't really liking this. Equities are weaker today. Um, we're looking at um gold weaker, the dollar is higher because interest rates are higher. In fact, we're seeing the two-year yield up 11 basis points on the day. That's the biggest move in the two-year yield, which tends to be very correlated to the Fed funds' futures. It's the biggest move we've seen on a Fed day since um January of 2022, and that was right before we started a hiking cycle with the Fed. So nothing really surprises us out of this meeting today because we have been warning that the Fed likely will not cut interest rates. We're not yet ready to say they're gonna have to hike this year, but if the Strait of Hormuz continues to remain shut, we have the supply chain disruptions, oil prices are higher again today. This will likely lead into the inflation data that we get in the coming months. So there is a chance that they may have to take action. Um we aside from this, there's really no other change to our view right now. Yields, as we said, bonds are selling off on this. Inflation expectations are also a bit higher. So we'll continue to monitor the markets and see if there's any buying opportunities in here. But again, we are cautious. It's also a huge week for earnings when it comes to the SP 500. So stay tuned. We'll be back. And if you want a history of our podcast, you go to marketswithmaking.fm. Thank you.