The Bulls Are Still Happy After This Rate Hike

 | Mar 15, 2017 | 2:20 PM EDT
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Various Fed members have been indicating for weeks now that they are likely to raise interest rates today -- and that is exactly what they did. Rates were hiked a quarter point, but the accompanying policy statement doesn't provide much guidance as far as subsequent hikes. The only real comment about future hikes was the following:

"The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the Federal funds rate; the Federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run."

The question that we will hear repeatedly now, is whether there will be two or three more hikes this year. The Fed doesn't even know, at this point. They will remain "data dependent," and it is very likely that Janet Yellen will repeat that phrase at her press conference at 2.30 p.m. ET.

The first reaction to the news is positive. There isn't anything in the statement that is overtly hawkish. Equities and bonds are up, while the dollar is weaker, which is an indication that the market feels that this statement is not aggressively hawkish.

As I've written, the market loves to love the Fed -- and those that look for a "sell the news" reaction are consistently disappointed. The market expects Janet Yellen's press conference to be dovish, and that should help keep a bid under the action.

The market is optimistic enough about future economic growth to handle a rate hike and a promise of more, but the Fed has a history of poor forecasting -- and if the market becomes more pessimistic about growth, there will be increased risk if the Fed doesn't soften its stance.

The bulls are happy for now, and the technical pattern of the indices is supportive of more upside.

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