Following a Tuesday that saw the S&P go from up over 1% to down almost 1% before closing flat for the day, all investor focus will be on the FOMC announcement at 2 P.M. EST.  Expectations are for a 25-basis point rate hike and a more dovish stance on monetary policy going into 2019.  It is likely they remove the word “gradual” in reference to their policy moves and should add language around being more “data dependent.”  Frankly, we don’t believe they should raise rates at all given current inflation and weakening economic data, but consensus expectations is giving them the green light.

What matters:

  1. FOMC Rate Hike Decision – All eyes for investors will be on the 2:00 P.M. EST decision of the FOMC, and press conference after. Expectations are for a 25 basis point hike to the Federal Funds Rate, lifting the target rate to 2.25-2.50%. However, investor focus will be on whether or not the Fed continues to soften their language regarding monetary policy in 2019, given the recent market downturn.
  2. Existing Home Sales – Existing Home Sales for the month of November will be released at 10:00 A.M. EST, with current expectation for a m/m decline of -0.4%, with existing home sales expected at 5.20 M compared to 5.22 M in October. Yesterday, Housing Starts exceeded expectations after NAHB Housing Confidence fell short of expectations on Monday.

Past performance is not a guarantee of future results. All market data points and expectations are from Bloomberg as of 12/18/2018, and should not be relied upon as current thereafter.


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