Conflicting Fed Member Comments Confusing Stock Markets

The Federal Reserve is sending mixed messages to the stock market.

Fed Chair Janet Yellen seemed worried last week about the weakening global economic outlook, saying: “The situation abroad bears close watching.” It signaled a “dovish” or cautious approach to the timing on lifting the Fed’s benchmark interest rates from zero.

In the days since then she’s been contradicted several times by “hawkish” Fed presidents who want to raise interest rates sooner rather than later.

Stock market investors have struggled to understand the reasons behind the Fed’s decision not to raise rates on Thursday and also to predict exactly when rates will rise.

The Dow fell almost 300 points Friday, before rising a little on Monday and then again falling over 180 points Tuesday. With other bad news — Volkswagen’s emissions scandal, China fears — already in the mix, heightened Fed uncertainty adds pressure on markets.


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza