March FOMC shows a dovish Fed and affirms "Fed put" remains in place, 1 of 4 positives this week so far

Tom Lee, CFA

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March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

It has been a positive week for markets, bolstered by several key developments. While not presented in sequential order, these positive factors collectively support the view that the Fed “put” is alive and well, demonstrated by the market’s reaction following the March FOMC rate decision.

  • Following the March FOMC decision, equities rallied to multi-day highs as the market interpreted the Fed’s stance as dovish.
    • The S&P 500 posted a new multi-day high after the meeting.
    • The probability of a May rate cut remained unchanged at 21%.
    • However, market expectations for total cuts (per fed funds futures) by December 2025 rose from 2.2 cuts to 2.6 cuts.
  • The Fed’s Summary of Economic Projections (SEP) added additional context.
    • The Fed cut its GDP growth forecast but raised its inflation outlook, a combination that could have been seen as a negative by investors.
    • Yet, the risk assessment data showed a distinctly dovish tilt.
    • 90% of Fed members cited heightened uncertainty around GDP growth, up from 45% three months ago.
    • 90% also noted that risks are weighted to the downside for growth, up from 25% previously.
    • This growing downside risk for growth suggests the Fed could be more inclined to lean dovish to counterbalance.
  • Additional dovish signals came from Chair Powell’s comments during the post-meeting Q&A session.
    • When asked about the inflationary impact of tariffs, Powell categorized it as potentially transitory.
    • This was in contrast to recent Fed staff research suggesting tariff effects could be longer term.
    • Powell indicated that if tariff-driven inflation is short-lived, the Fed could “look through” it and refrain from tightening.
  • On inflation expectations, Powell emphasized that longer-term expectations remain well-anchored.
    • This was notable given recent sharp increases in short-term inflation expectations from the University of Michigan survey.
    • Powell also addressed financial conditions, acknowledging that market declines are material to the Fed’s policy outlook.
    • He noted that while hard data has remained firm, soft data (such as surveys) has weakened, prompting closer Fed scrutiny.
    • These comments reinforce that the Fed is actively watching financial conditions, another indication that the “Fed put” remains in place.
  • Beyond the Fed, geopolitical developments hint at possible tariff relief ahead of the April 2 deadline.
    • On Wednesday, Fox correspondent Edward Lawrence tweeted that White House economic adviser Kevin Hassett had been in negotiations alongside the Commerce Secretary and Treasury Secretary to reduce tariffs ahead of the deadline.
      • This suggests a resolution could come sooner than expected.
    • Treasury Secretary Bessent also confirmed that several countries are proactively engaging in negotiations to reduce tariffs.
      • Bessent expressed optimism that some tariffs might be rolled back as key trading partners come to the table.
      • This development is underappreciated by markets but could be a meaningful tailwind if a deal materializes.
  • Additionally, the Manheim Used Vehicle Index fell 1.6% in Monday’s release.
    • This is a notable decline and signals ongoing deflation in core goods prices.
    • Since used car prices are a key component of core CPI, this drop could lead to lower inflation prints in coming months.
    • Supporting this, 1-year inflation forwards have declined from 2.73% a month ago to 2.45% currently.
  • Mark Newton Notes technical indicators are also pointing toward a market bottom.
    • Newton observed a sharp expansion in market breadth—the strongest pace seen in some time.
    • The positive equity market reaction following the Fed decision is another encouraging sign.
    • Newton is watching 5,703 on the S&P 500 as a key level to confirm that the market bottom is firmly in place.

Bottom Line: Material positives this week confirm that the Fed put is alive and well.

March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

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March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far
March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

Key incoming data March:

  • 3/3 9:45 AM ET: Feb F S&P Global Manufacturing PMI Tame
  • 3/3 10:00 AM ET: Feb ISM Manufacturing PMI Tame
  • 3/5 9:45 AM ET: Feb F S&P Global Services PMI Tame
  • 3/5 10:00 AM ET: Feb ISM Services PMI Tame
  • 3/5 10:00 AM ET: Jan F Durable Goods Orders Tame
  • 3/5 2:00 PM ET: Mar Fed Releases Beige Book Tame
  • 3/6 8:30 AM ET: 4Q F Non-Farm Productivity Tame
  • 3/6 8:30 AM ET: Jan Trade Balance Tame
  • 3/6 8:30 AM ET: 4Q F Unit Labor Costs Tame
  • 3/7 8:30 AM ET: Feb Non-Farm Payrolls Tame
  • 3/7 9:00 AM ET: Feb F Manheim Used Vehicle index Tame
  • 3/10 11:00 AM ET: Feb NY Fed 1yr Inf Exp Tame
  • 3/11 6:00 AM ET: Feb Small Business Optimism Survey Tame
  • 3/11 10:00 AM ET: Jan JOLTS Job Openings Tame
  • 3/12 8:30 AM ET: Feb CPI Tame
  • 3/13 8:30 AM ET: Feb PPI Tame
  • 3/14 10:00 AM ET: Mar P U. Mich. Sentiment and Inflation Expectation Hot
  • 3/17 8:30 AM ET: Feb Retail Sales Data Tame
  • 3/17 8:30 AM ET: Mar Empire Manufacturing Survey Tame
  • 3/17 10:00 AM ET: Mar NAHB Housing Market Index Tame
  • 3/19 9:00 AM ET: Mar M Manheim Used Vehicle index Tame
  • 3/19 2:00 PM ET: Mar FOMC Decision Dovish
  • 3/19 4:00 PM ET: Jan Net TIC Flows Tame
  • 3/20 8:30 AM ET: Mar Philly Fed Business Outlook
  • 3/20 10:00 AM ET: Feb Existing Home Sales
  • 3/24 8:30 AM ET: Feb Chicago Fed Nat Activity Index
  • 3/24 9:45 AM ET: Mar P S&P Global Manufacturing PMI
  • 3/24 9:45 AM ET: Mar P S&P Global Services PMI
  • 3/25 9:00 AM ET: Jan S&P CoreLogic CS home price
  • 3/25 10:00 AM ET: Mar Conference Board Consumer Confidence
  • 3/25 10:00 AM ET: Feb New Home Sales
  • 3/26 10:00 AM ET: Feb p Durable Goods Orders
  • 3/27 8:30 AM ET: 4Q T GDP
  • 3/28 8:30 AM ET: Feb PCE Deflator
  • 3/28 10:00 AM ET: Mar F U. Mich. Sentiment and Inflation Expectation
  • 3/31 10:30 AM ET: Mar Dallas Fed Manuf. Activity Survey

Economic Data Performance Tracker 2025:

March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

Economic Data Performance Tracker 2024:

March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

Economic Data Performance Tracker 2023:

March FOMC shows a dovish Fed and affirms Fed put remains in place, 1 of 4 positives this week so far

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