Your morning market bite. Fed hikes by 75, suggests rates could go higher and be there for longer.
Stocks:
Wall Street fell after Chair Powells press conference.The market had initially railed upon the release of the Fed's decision. However, "higher for longer" language saw stocks take a tumble. The S&P500 finished the day down by 2.5%, with all sectors lower. Tech underperformed with the NASDAQ shedding 3.4%. SPI Futures are pointing to a 113 pointfall for the ASX200 this morning. $NASDAQ(.IXIC)$ $S&P/ASX 200(XJO.AU)$ $SPY(SPY)$ $S&P 500(.SPX)$
Rates/bonds:
The FOMC lifted rated by 75 basis point to 4.00% as expected. Fed Fund Futures are suggesting a reasonable chance the Fed could lift rates as high as five and half percent. While Powell acknowledged small hikes are possible, he emphasized the level at which rates peak and the time which they spend there is the Fed's focus.The US10 year yield edged higher by 4 basis points to 4.08%, while the 10-2 spread narrowed slightly.
FX:
The US Dollar pushed higher, as the Euro and Pound dropped 0.5% and 0.8% respectively. The latter comes in focus ahead of the BOE tonight, which is expected to hike rates 75 basis points to 3.00%. The AUD/USD was down, to be trading around 0.6350. $Australian Dollar - Dec 2022(AUD2212)$
Commodities:
Oil prices rose, in part helped by a larger than expected-3.1 million barrel draw down in US crude inventories. Gold slipped on the hawkish Fed. Commodities remain relatively well supported by the prospects of easing COVID-19 policy in China.
Crypto:
Bitcoin again proved to be resilient, holding above $US20,000.
Let's see where it lands. $($spx)$
Powell has had issues with communication. But his framing of the policy outlook being about the pace of hikes, the path of hikes, and the duration rates will need to remain high was very good.
Follow me to learn more about analysis!!
Comments