Unexpectedly Intriguing!
01 April 2019

Since the U.S. Treasury yield curve officially inverted on 22 March 2019, when the yield of the 10-Year note dropped below the yield of the 3-Month bill, many of the Federal Reserve's minions have been running around in all different directions as confusion reigns at the U.S.' central bank.

Although it's April Fool's Day, we're not joking. In all seriousness, if you want proof, just scroll down to sample the selection of market-moving headlines that we've featured in this week's edition of our S&P 500 chaos series!

The lack of direction at the Fed coincides with an increased likelihood that the Fed will act to cut short term interest rates in the U.S. as early as by 18 September 2019, with the CME Group's FedWatch tool is now projecting better than even odds of at least a quarter point rate hike being implemented at that time or shortly after, where the outbreak of confusion at the Fed makes it more likely that the Federal Open Market Committee that sets the Federal Funds Rate will be compelled to follow the market's direction.

CME Group FedWatch Tool Federal Fund Rate Futures Probabilities, Snapshot on 29 March 2019

For the S&P 500 (Index: SPX), that puts the focus of investors somewhere between the current quarter of 2019-Q2 and the more distant future quarters of 2019-Q3 and Q4, which coincidentally keeps the trajectory of the index within the projection of the redzone range we've featured on our spaghetti forecast chart during the last ten weeks.

Alternative Futures - S&P 500 - 2019Q1 - Standard Model with Annotated Redzone Forecast - Snapshot on 29 Mar 2019

Let's move on to the major headlines that splashed across the news wires during the last week of March 2019, where if you can tell what unified direction the members of the Fed are going to go from the statements they made, you're probably ignoring everything they said!

Monday, 25 March 2019
Tuesday, 26 March 2019
Wednesday, 27 March 2019
Thursday, 28 March 2019
Friday, 29 March 2019

If you took all the economists at the Federal Reserve, and laid them out end-to-end, you would never reach a conclusion.

Elsewhere, the Barry Ritholtz outlined the positives and negatives that were to be found in the week's markets and economy-related news, if you're looking to get a bigger picture of the week's events, sans the Fed.

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