The stock market could do something strange this week after the Fed decision
Odds of more interest rate hikes coming this year have grown.
TL;DR
- The stock market could rally on a rate hike, which is an unusual occurrence.
- Traders are prioritizing the bond market due to worsening inflation and rising longer-dated Treasury yields.
- Investors hope a rate hike will tame inflation and keep long-term bond yields anchored.
- The market's reaction will depend on the Fed Chair's stance on inflation during the press conference.
- Historically, the start of a hiking cycle has been negative for stocks in the short term.