But all bets are off if something big breaks.
Since the low point on Christmas Eve, the S&P 500 has rallied 9.9%, nearly half of which on December 26. This was helped along by the word “patient,” used by Fed Chairman Jerome Powell, other Fed governors, and the FOMC minutes. The effect: Wall Street has stopped haranguing the Fed about the rate hikes and the QE unwind, and the White House has stopped leaking titillating tidbits about President Trump wanting to fire Powell. The dust is settling.
And now the Fed governors are fanning out to talk about rate hikes again, adding the soothing terms as “patience” or “wait,” and disagreeing with each other, as they usually do in public to keep the debate going on how many rate hikes will eventually happen.
In early 2018, the markets expected two rate hikes for that year. Fed governors gave speeches throughout the year that gradually removed the disagreement over how many rate hikes, and in the end, they voted unanimously for four.