Fed To Raise Rates Again?

Fed To Raise Rates Again?

The Fed’s two-day meeting ends today with almost a certainty that they will once again raise rates.

The consensus on the street is that we will see a quarter point rate hike along with dovish comments. Any other outcome, I expect will cause a dramatic move in the markets.

We are getting to the point in the Fed’s hiking cycle where there are a lot of questions about which way they will go from here. There is a lot of uncertainty in the markets trying to answer that question: will the Fed make good on their prediction for 2019 and hike three more times, or will they pause?

I believe that’s the reason for all the wild volatility in the Equity Markets. There is a lot of debate amongst Wall Street Traders on what is the next move by the Fed.

Traders are hoping to get some clarity from the Fed today, possibly giving the market a breather from all this uncertainty facing future rate hikes.

We don’t expect any surprises today, but everyone is curious to hear what the future path is for 2019. Their comments will be released after the announcement at 2pm EST today.

The Fed has a lot of flexibility, inflation has cooled off over the last three months, oil prices are down, the dollar is strong and there has been some softening in the housing sector. Inflation pressures seem to be moderating and are already below the Fed’s target. So if they want to pause they will be able to do that and I expect the markets will look at it quite favorably.

If the Fed indicates they are done raising rates, I expect a softening of the Dollar Index which should help the price of Gold to catch a bid and move to the upside.

The Platinum Market

Platinum continues its bearish tone from a rising market surplus. Headlines of fading production of diesel engines to more environmentally friendly gas and electric vehicle engines are keeping investors out of the market, since the price of Platinum reached it most recent high back in August 2016.

Even with the price of Palladium seemingly setting new highs every day and the price of Platinum heading in the opposite direction, the likelihood of the car companies making a substitution is highly unlikely.

Global car sales continue to decline and that news alone doesn’t sit well with Platinum investors.

For the time being, we expect the price of Platinum to test its most recent low of $755 dollars, hit in August, but if it gets down to that level I expect significant buying interest to emerge.

Have a wonderful Wednesday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.