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Financials Up After Fed Statement - Financials Roundup

Shares of banks and other financial institutions rose slightly as traders digested the latest policy move from the Federal Reserve. The Fed's dot plot -- the predictions for future rate moves made by central-bank officials -- suggest scant anticipation of further rate cuts in 2020, contrary to market expectations. That was consistent with Mr. Powell's previous view that recent rate cuts were a "mid-cycle adjustment" rather than a new, looser monetary policy, said Michael Arone, chief investment strategist at the U.S. intermediary unit of State Street Global Advisors. For banks, fewer rate cuts could mean higher profit margins on loans. In a press conference after the statement hit the tape, Fed Chairman Jerome Powell also reassured markets that an intervention in short-term debt markets by the New York Fed was nothing to worry about. The abrupt increases in rates in money markets have no implications for monetary policy or the economy, said Mr. Powell. "I don't think it's gong to be harbinger of some type of liquidity crisis or anything like that," said Mr. Arone. "You had the slightly earlier than typical corporate income-tax payments due, a large Treasury supply settling, particularly for T-bills" and the fallout of the Fed's unwinding of its balance sheet as a combination of temporary factors creating the disruption, Mr. Arone said.

 

-Rob Curran, rob.curran@dowjones.com

 

(END) Dow Jones Newswires

September 18, 2019 17:02 ET (21:02 GMT)

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