Wall Street Reacts To The Biggest Fed Rate Hike In 22 Years

A handful of Wall Street luminaries were quick to be among the first to record their kneejerk responses to the Fed’s biggest tightening since May 2022. Below we excerpt from their initial reactions:

Peter Boockvar of Bleakley Advisory Group:

“The FOMC statement was historic yet uneventful,” as he expected, and adds that during the press conference, Powell will “likely be asked about hiking by 75 bps at any one meeting, and he won’t likely commit to that.”

Seema Shah, chief strategist at Principal Global Investors:

“This should be welcomed by investors rather than feared. Even so, this first 0.5% move since 2000 is not nearly enough. In the seven weeks since Fed lift-off, the inflation risk seems to have only grown. Headline inflation is near 9%, inflation expectations remain elevated, there are almost two vacancies to each unemployed person, and measures of wage growth continue to rise.”

LPL Financial’s Quincy Krosby.

Expects Powell to be asked about the recent tech selloff amid rising rates: “The Fed wants to see that the market understands what their goal is because the market is one of the mechanisms by which they slow down demand.”

Bloomberg Intelligence’s Ira Jersey:

“Reading more deeply, something that surprises me is that the Federal Reserve won’t be moving to the $60 billion maximum Treasury cap during a refunding month. We thought it would increase the caps to $60 billion in August to allow some reinvestment of coupons during a Treasury refunding month. Now it’s likely there will be large T-bill runoff in September, a bit over $16 billion, after not rolling off bills at all.”

Diane Swonk, Grant Thornton LLP’s chief economist,

The Fed is now in position where it is more focused on inflation than on employment. It’s been a “very, very long time” since we’ve seen the U.S. central bank aligned this way.

Steve Sears, president of Options Solutions,

“It is hard to imagine a more consequential press conference than today’s presser by Chairman Powell. Every word that he utters has the power to move the markets meaningfully higher or lower. A rhetorical slip of the tongue, or the use of the wrong word, will send the Street into deep analytical overdrive, while the algos that are increasingly dictating the daily price action will glow red hot as they try to find some data precedent to use to price securities.”

Guggenheim’s Scott Minerd

“The Fed’s independence is being more challenged today than it has been in generations and the chair knows that and the committee knows that and they are being more reactive to the political pressure than they might have been under a Volcker or a Greenspan or a Yellen era.”

Davidson Advisory Group’s Chris Zaccarelli:

“There’s a real battle going on between dip buyers and those that believe there is more downside to come. We are somewhere in the middle — we firmly believe we are in a bear market and there is more downside still ahead, but we acknowledge that bear market rallies can be sharp and vicious.”

Source: Bloomberg