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UBS Market Internal Insight
March 2025: A Significant Post-FOMC Event
Key Highlights:
- FOMC Buying Resurgence: Since November 2023, the Federal Open Market Committee (FOMC) has seen significant buying activity. The March 2025 FOMC event marks the first meaningful post-FOMC excess buy flow since that time.
- Excess Buy Flow: Following the March 2025 FOMC, there was a 24-hour excess buy flow of +$70 billion, showcasing a persistent trend with no strong opposing flow (Chart 1). This is considered a critical signal in our model.
Historical Context and Comparison:
- November 2023 FOMC: Often referred to as a "Fed pivot" event, the November 2023 FOMC triggered a notable improvement in the Intraday Recovery Score, with a strong "buy-the-dip" trend. By January 2024, our model turned long-term bullish, predicting a +20% SPX upside within one year.
- March 2025 vs. November 2023:
- March 2025: Post-FOMC excess buy flow reached +$70 billion, followed by +$7 billion in buy flow and -$7 billion in sell flow by 2 PM the next day, maintaining a net persistent trend.
- November 2023: Post-FOMC excess buy flow was +$23 billion, followed by +$13 billion and +$9 billion in buy flows the next day, totaling +$45 billion with a similarly persistent trend.
Historical Observations (Table 3):
- Rarity of Meaningful FOMC Events: Out of 58 FOMC meetings since 2018, only 20 (34%) have been classified as meaningful excess flow events.
- Accuracy of Predictions:
- On the buy side, meaningful excess flow events correctly predicted SPX outcomes 9 out of 9 times, with an average SPX upside of +7.0% within five weeks (excluding FOMC day).
- On the sell side, predictions were accurate 8 out of 10 times, with an average SPX downside of -6.1% within two weeks (excluding FOMC day).
Potential Implications of March 2025 FOMC:
While it is too early to confirm whether the recent March FOMC will similarly push the Intraday Recovery Score into bullish territory, historical data suggests short-term bullish implications. On average, SPX has shown a +7.0% upside within five weeks, with a range of +4% to +13% (excluding FOMC day).
Conclusion:
The March 2025 FOMC excess buy flow of +$70 billion signals a rare and meaningful post-FOMC event, comparable to the November 2023 FOMC. Historical trends suggest potential short-term bullish momentum for SPX, reinforcing the importance of monitoring these developments closely.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!