No room for bad surprises from the Fed or Nvidia; markets could make white hot moves in either direction. Why a potential pull is likely
The Fed meeting minutes on Wednesday are expected to highlight the Fed has more work to do and that it can keep rates higher for longer, after the recent hotter than expected inflation reads (CPI and PPI). The concern I have is that markets are continuing to hit new all time highs despite and the Fed Fund futures are still expecting 1% Fed US rate cuts this year.
What is beneath the surface cannot be ignored. The Fed futures markets suggest bets are almost off for a potential Fed cut in March. And now, futures traders are losing hope of a cut in May as well, with just a 28% probability of a cut. Although, a June cut seems more probable (61.4% probability), September (a 76% probability) and December (66% probability). But, should the Fed minutes be hawkish, the market will could likely pull back and unwind one of the Fed rate cuts. The double danger is if Nvidia $NVIDIA(NVDA.US$ disappoints too.
On top of the above, the technical indicators to me suggest the S&P500 is overbought. So just be weary here. And watch ETFs such as SPY $SPDR S&P 500 ETF(SPY.US$ $iShares Core S&P 500 ETF(IVV.US$ that mirror the S&P500.
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Moomoo Official Market Strategist
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