The Federal Open Market Committee (FOMC) did not cut rates this week, but the stock market reacted as though they did. Stocks rallied off the FOMC policy statement, their summary of economic projections, and Fed Chairman Jerome Powell’s subsequent press conference.
Their main message was that they are data dependent and prepared to keep rates higher for longer but still see three cuts by the end of 2024 as a possibility. The market seemed to only focus on that last part.
In reality, the Fed’s Summary of Projects was more hawkish than their previous one in December. In Wednesday’s updated Summary of Projections, nine of the 19 FOMC members saw three cuts coming before the end of the year with one member expecting four. In December’s, six members projected three rate cuts in 2024, four projected four cuts, and one member projected six. So, three rate cuts in 2024 went from being the middle ground of expectations in December to the max number of cuts expected in this latest meeting.
The projected Fed Fund Rate by the end of the year by the 19 FOMC members.
The current rate 5.25% - 5.5%.
The market must have been satisfied enough that three rate cuts were still on the table despite the last three Consumer Price Index data being higher than expected. The market did pull-back some Friday, especially in the S-fund, but it is hard to say whether that was a pause off the Fed fueled rally or a realization that the Fed was not as market friendly as they initially thought.
Here are the weekly, monthly, and annual TSP fund returns for the week ending March 22:
Friday’s selling did help to distinguish this week’s best performer in the TSP Talk AutoTracker. The C-fund was the best performing fund with a weekly gain of 2.31%. The S-fund was on track to take the title but a 0.95% pull-back on Friday brought its weekly gains just below the C-fund’s.
Seven members of the TSP Talk AutoTracker were able to outperform the C-fund this week. Four of the seven moved out of stocks on Thursday locking in the high of the week before Friday’s losses.
This was best done by TSP Talk member Butters. Butters held 100% S-fund through the week then used their second IFT of 2024 to move to 100% G-fund. This move landed them a 3.16% return for the week. Butters currently sits at 60[SUP]th[/SUP] place in the TSP Talk non-premium AutoTracker standings just below the 54 members who are tied for 4[SUP]th[/SUP] who have held the C-fund all year. A pull back of around 0.15% or more by the C-fund would put Butters in the top 4 of the standings.
Good luck and thanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at TSP Talk - Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.
Thomas Crowley
(TommyIV)
www.tsptalk.com
Weekly Wrap-Ups Archive
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