Markets:
- Gold up $41 to $2020
- US 10-year yields down 18 bps to 4.03%
- WTI crude oil up 97-cents to $69.57
- S&P 500 up 1.2%
- Russell 2000 +3.5%
- AUD leads, USD lags
The commerce for the reason that Fed resolution has been to dump the US greenback and purchase every thing else.
It began with the assertion when it referred to ‘any’ additional cuts that is perhaps wanted quite than ‘additional cuts’, highlighting that the Fed is at or close to the height, one thing Powell confirmed later. That continued with the primary seems to be on the dot plot, that confirmed the end-2024 dot at 4.6% quite than 4.9% anticipated, and down from 5.1% beforehand.
Powell threw gasoline on the hearth when he provided no pushback to the market easing narrative, that is now pricing in 142 bps in cuts subsequent yr. As well as, he officers are very centered on “not making that mistake” of holding onto excessive charges too lengthy. Beforehand, he is highlighted parallels to the Seventies and indicated a willingness to maintain charges excessive for too lengthy to verify the job was achieved. Now he is modified that tune and is making an attempt to string the needle.
The market actually did not miss the alerts with the greenback falling 50 pips initially after which considerably extra, together with a 240 pip drop in USD/JPY because the bulls take one other battering. Elsewhere it was straighforward with greenback losses round 80 pips throughout the board.
Mounted earnings sang the identical tune with US 2s down 28 bps on the day to the bottom since June. Gold naturally benefitted as properly, rising to $2020.
There wasn’t a lot form in any of the strikes as the primary hints had been dovish and subsequent statements made it abundantly clear. Does cash are available from the sidelines now? That shall be fascinating given how far markets have moved already.
