The fallout from the Fed’s dovish message should be lower bond yields and less frenetic dollar gains—two potential positives for stocks.
Markets are transitioning to a limbo period where they wait for more information on when the central bank might hike rates, and in the process could become more volatile. There are no economic reports for markets to react to Friday, so traders are expected to position ahead of next week and what could be an important speech Monday by Fed Vice Chairman Stanley Fischer.
The dollar, plunging Wednesday, reversed course Thursday but traders still expect it to be buffeted by the Fed’s new message—it is watching the dollar and the currency has had an impact on the economy. Markets flexed after the Fed on Wednesday released lowered economic and inflation projections, while it also reduced its interest rate forecasts.
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