(3 May 2023) As expected, the Fed hiked interest rates another 25 basis points today as part of their ongoing effort to curb inflation.  While Fed Chair Jerome Powell acknowledged the possibility of pausing the tightening cycle in June if it was warranted by the data, he remained somewhat non-committal about the direction of interest rates for the rest of the year.  While mere mention of a possible pause was welcome news to investors, the market eventually sold off late this afternoon as the uncertainty surrounding the Fed’s future rate path began to sink in.

Markets have been looking more vulnerable in recent days as economic data is showing more signs of softening.  And yet if inflation continues to be elevated while the economy is slowing, it could paint the Fed into a corner without any obvious escape plan.  Chair Powell is hoping that the impending recession will do most of the Fed’s dirty work as layoffs will dampen wage growth and thus break the wage-price feedback loop.

This period of choppy volatility may not yet be done as we approach Friday’s lunar eclipse.  The eclipse is due to reach its maximum at 1.33 p.m. New York time.  While eclipses tend to have bad astrological reputations as they are often seen as harbingers of difficulty and disruption, this isn’t always the case as far as the stock market is concerned.   In fact, some eclipses pass without any significant market reaction at all.  This one is a bit more suspect, however, since it occurs at 20 Libra, just four degrees from an opposition with Uranus, the planet of sudden and unexpected changes.  And yet it’s possible that the Venus-Jupiter-Neptune alignment could exert a short term mitigating effect.

But the larger planetary picture is looking somewhat unstable.  The most obvious potential trouble spot involves retrograde Mercury which is slowly backing into a near-conjunction with Rahu (North Lunar Node) ahead of its direct station on May 14 at 11 Aries.  And both Mercury and Rahu come under the influence of the full-strength 3rd house/60 degree aspect from Saturn.  Aside from any potential eclipse effects, this is a decidedly difficult alignment.  We should therefore be open to the possibility that collective sentiment could worsen next week when this alignment makes its closest approach.

For more details, check out my weekly subscriber newsletter which is published every Sunday.   In addition to reviewing the key planetary and technical influences on US and Indian stocks for the short and medium term, I also provide an astrological analysis of potential upcoming moves in currencies, gold and oil.

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Photo Credit: AdamChandler86