The Fed hasn't been this terse since 2007. What a 130-word statement signals for market stability.

By Steve Goldstein

Federal Reserve Chair Kevin Warsh doesn't have a lot to say.

There's a recession - in word count, at least.

Bank of America calculates this week's Federal Open Market Committee statement explaining the decision to lift interest rates by a quarter-point as its most terse, at just 130 words, since 2007.

The bank's strategists greet the minimalist approach positively. "The return of credibility and end of 'oversharing' are long-term bullish for market resilience, but require higher bond risk premium," say strategists led by Jared Woodward. New Federal Reserve Chair Kevin Warsh has made a concerted effort to give less guidance in an effort to get a stronger signal from financial-market participants.

Over the last two weeks, the Fed as well as the Bank of Japan and the European Central Bank have lifted interest rates, with the Bank of England pausing but threatening to lift rates further. "Clearly the 'run it hot' policy posture is done; not yet time for defensives but quality, value, and yield look prudent," said the BofA strategists.

Unless peace breaks out - either on the trade front, when U.S. President Donald Trump and Chinese President Xi Jinping meet next week, or in the Middle East - the market's best hope for big upside is a peak in hyperscaler capital expenditure, the strategists say.

Remarkably, just 2% of global equity market indices are trading above both their 50-day and 200-day moving averages, down from 66% a week ago, the strategists find.

The S&P 500 SPX closed Thursday over 6% above its 200-day average but only fractionally above the 50-day average.

The firm's own "bull and bear indicator" remains at a hot 9.5 out of 10, as strong inflows to global equities are offset by high-yield bond outflows and wider spreads on AT1 bonds, a type of fixed-income instrument that banks issue.

That indicator first generated a sell signal on May 26, and since then, the S&P 500 has managed to gain 1.6%, the firm said.

-Steve Goldstein

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