Stock Market Update

[BRIEFING.COM] The FOMC voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%, as expected. The context around that decision was a little different than what the directive suggested at the time of June 11-12 FOMC meeting.

It clear that the Fed is looking at things in more balanced manner. That is, it is not overweighting the inflation side of its mandate like it had been. That is a nuanced transition that is in-line with the comments heard from various Fed officials leading up to today's decision.

We also consider it a nuanced transition to opening the door for a rate cut in September, provided the inflation data continue to point to ongoing disinflation.

Fed Chair Powell will begin his press conference at 2:30 p.m. ET. We expect that he will emphasize that the Fed isn't going to pre-commit to any policy position and that decisions will be made on a meeting-by-meeting basis while at the same time pointing out that inflation trends have improved and that labor market trends have softened.

The word "balance" is apt to be used quite a bit, which gives the Fed flexibility to act as necessary, but in reality gives the Fed some cover to remove some policy restraint in September as it is a step away from being fixated on the inflation risk. It is a step the Fed will likely take if the coming inflation reports keep stepping in the fed's preferred direction.