Big Data on Tap - April 29, 2021

Investors are eagerly awaiting two big events this week: the conclusion of the Fed’s two-day meeting on Wednesday and Thursday’s release of Q1 GDP.

The fed funds rate is hovering near zero, and the Fed continues to purchase $120 billion in Treasury bonds and mortgage-backed securities each month. 

Given the recent acceleration in economic growth and expectations 2021 will be a strong year, pressure is mounting on the Fed to pull back on its super easy money policy.

Most economists believe we won’t see a reduction until Q4, per a Bloomberg survey, but we may see a small pivot by Fed Chief Powell as he slowly prepares investors for such an event. Yet, don’t expect a roadmap for tapering.

On rates, Powell wants to see a fully recovered labor market, and he’s said a rate hike this year is “highly unlikely.”

Meanwhile, economists expect Q1 GDP to advance at a 6.5% annualized rate, with consumer spending leading the way (IBD survey).

  • It’s a backward-looking gauge, but it will point to new economic momentum.

Investor’s corner

An easy Fed policy has been one driver of the stock market rally over the last year, but faster economic growth and higher corporate profits have also helped.

It’s best to look past any volatility that may result from short-term announcements and data.

A well-diversified financial plan helps investors keep their focus on longer-run goals. If you are adhering to such a plan, we congratulate you because you have chosen the narrow path. It’s your roadmap to your financial goals.