U.S. stocks traded lower in another volatile week as investors grappled with uncertainty regarding monetary policy, the economic growth outlook, and escalating geopolitical tension. On Wednesday afternoon, the Federal Reserve’s two-day policy meeting concludes with a policy decision due out at 1 p.m. Central, followed by comments from Fed Chair Jerome Powell. While no immediate policy changes are expected, markets are anticipating the central bank to point towards the first rate-hike in March of this year. In addition, market participants will be looking for clarity surrounding reduction of the Federal Reserve’s massive $8.9 trillion balance sheet once asset tapering has been completed. Markets have been volatile going into the Fed decision, with Russia-Ukraine tensions adding to concerns. Today, markets will likely focus on how aggressive the Fed’s guidance will be to fight inflation, both in terms of interest-rate hikes expected this year, as well as reduction of the balance sheet.  Looking forward, we have the first estimate of fourth-quarter GDP on Thursday, with the consensus growth expected to be 5.7%.  Friday, personal income and outlays will be reported, with the key PCE price index expected to rise 5.8% year-over-year (core 4.8%).  Both these reports will give markets insight into growth and inflation as we move forward in the year.

Source: GSAM, Daily Upside, JPM, Factor Investor

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