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Market Update

Fed minutes recap and market outlook: Higher for longer

February 26, 2024
  • amol dhargalkar headshot


    Amol Dhargalkar

    Managing Partner, Chairman
    Global Head of Corporates

    Kennett Square, PA


In what was a relatively light week on the economic data side, the market looked to the highly anticipated January Federal Open Market Committee (FOMC meeting) minutes for any insight on what the Fed will do next.

Fed minutes recap

To briefly recap January’s FOMC meeting, the Fed voted unanimously to hold the fed funds rate steady at a target range of 5.25–5.50% for the fourth consecutive time. In the proceeding press conference, Chair Powell acknowledged that inflation goals are moving in the right direction, but the FOMC will need to see a continued trend of positive data before making any rate cuts. He also recognized that “it will likely be appropriate to begin dialing back policy restraint at some point this year.” Chair Powell’s comments were viewed as somewhat dovish and the market reacted, with Treasury yields initially dipping. Since then, Treasury yields have been on the rise due to the market’s reaction to stronger-than-expected economic data and hawkish Fed speak.

Source: FRED

The highly anticipated January FOMC meeting minutes were released last Wednesday, which highlighted the Fed’s commentary from the most recent meeting. Investors looked for any indication on what will happen to rates in March’s meeting. It was clear that Fed officials are optimistic that monetary policy is doing its job combatting inflation, but there is a need to proceed cautiously before cutting rates. The minutes stated that “most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to two percent.” It is also worth noting that Fed officials agreed that the fed funds rate is likely at its peak for this cycle.

Market impact

Considering the FOMC meeting and its subsequent minutes that occurred three weeks ago, the Fed’s stance on monetary policy may be shifting. Since the meeting, we’ve received hotter-than-expected inflation data and a jobs report that blew out expectations by adding 353,000 jobs in January. Initial jobless claims fell to a five-week low last week. Equity markets surged to all-time highs and futures point to more gains. All are indicators to investors that rates could stay higher for longer. The market is currently pricing in the probability of three rate cuts this year, which is down from the originally anticipated six rate cuts. The market and the Fed’s most recent dot plot are now in sync.

Source: CME FedWatch Tool

The week ahead

Looking to this week, all eyes will be on Wednesday’s core PCE reading, which is the Fed’s preferred inflation measure. We also will receive month-over-month durable goods data, quarter-over-quarter GDP growth rate, and month-over-month personal income and personal spending.

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About the author

  • Amol Dhargalkar

    Managing Partner, Chairman
    Global Head of Corporates

    Kennett Square, PA

    Amol Dhargalkar is a Managing Partner and Chairman for Chatham’s Board of Directors. He is the Global Head of the Corporates sector and brings over 20 years of experience in derivatives capital markets expertise.


Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit