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Union Bank of Switzerland’s analysis team suggests that after the US Federal Reserve has delivered another dovish surprise, markets are appearing to want more.

Key Quotes

“At last week’s Fed meeting the updated “dot plot,” which indicates where FOMC participants expect rates to be at the end of each calendar year, showed a significant downgrade.”

“Fed members now expect no hikes in 2019, compared with two hikes shown in Dec’s dot plot. Fed also confirmed that it would complete the reduction in its balance sheet by Sept, compared with our estimate at the start of the year that the run-off would end in March 2020.”

“Fed Chair Jerome Powell stated in his press conference that current data does not point to a rate move in either direction, yet markets are pricing in a cut.”

“The sharp fall in the S&P 500 at the end of last week suggests the Fed’s dovishness has been insufficient to allay fears about the weakening in growth that lies behind the shift in policy stance.”