Market Update

From the attached table, it's evident that markets concluded the week on a positive note.
The Federal Reserve, in line with general predictions, opted for a pause in interest rate hikes this week. Decision-makers maintained the interest rates at a steady 5.00-5.25%. Given the evident descent in inflation rates and emerging indications of an economic downturn, we interpret this move as a chance for the Fed to meticulously evaluate current economic data. This comes especially considering the inherent delayed impacts of monetary decisions.
In a slight deviation from expectations, the Fed raised the terminal rate in the Dot Plot by 50 basis points. This decision witnessed unanimous agreement from the Federal Open Market Committee (FOMC) members, showcasing a more harmonized strategy. The 2023 growth projection was adjusted upward to 1%, from March's 0.4%. Meanwhile, the unemployment prediction was decreased to 4.1%, a reduction from the earlier 4.5% estimate. This interim halt in rate hikes offers the committee a window to gather comprehensive data and reflect on its policy implications. During his address, Fed Chair Jay Powell underlined that the impending July decision hinges primarily on incoming data.
The ongoing stock market upswing gained further traction, attributed partly to anticipated leniency from the Fed. While we don't anticipate a full roll-back of the recent accomplishments, investors should brace for market ebbs and flows, especially in the shadow of the Fed's maneuvers and the influx of economic data. As portfolio managers, we perceive such market events as golden opportunities to capitalize on market troughs and dynamically tweak our investment strategies.
In juxtaposition with their American counterparts, the European Central Bank (ECB) rolled out a 25-basis point rate increase, settling the deposit rate at 3.5%. In tandem with this move, the ECB ramped up its inflation outlook while toning down its growth predictions. The market seemed indifferent to the ECB's hawkish undertones, especially after ECB President Christine Lagarde hinted at a probable rate hike in July, barring any drastic economic shifts.
Wrapping up the week, the Bank of Japan (BoJ) held steady on its existing policies. Recognizing the ongoing economic revival, the central bank projected a deceleration in core consumer inflation by mid-fiscal year. BoJ's Kazuo Ueda remarked that Japan's inflation hasn't yet stabilized, necessitating more patience to attain the 2% inflation goal. Ueda also shed light on the potential repercussions of US rate hikes, including the looming risk of an economic slowdown.