- Fed holds rates steady as expected, but starts QT tapering from June 1st. Treasury bond reduction will be $25 billion, not $60 billion as previously. MBS remains unchanged.
- The Fed says in a statement that it sees no progress towards the inflation target and that cuts are not possible in the near future.
- However, the Fed is not making the "hawkish" pivot that the market expected after the recent high inflation readings. Powell basically rules out rate hikes at the conference and indicates that rates are at a sufficiently restrictive level. The Fed sees a significant slowdown in growth and consumer demand and intends to focus more on the labor market, with inflation remaining below 3%.
- The market sees possible cuts in September.
- US100 rises 1.2% and US500 rises 1.0% after Powell's conference. EURUSD tested 1.0730 and gold found itself at $2320.
- The ISM index for manufacturing falls to 49.2 points for April, against expectations of 50 points. However, weak expectations for the sector do not apply to prices. The price sub-index rises to 60.9 points, showing that price pressure is also rising in the manufacturing sector, which could make rate cuts unlikely in the near term.
- JOLTS shows a decline to 8.488 million - the lowest level since February 2021. 8.686 million was expected.
- The ADP report showed employment in April at 192,000, above expectations of 175,000. A reading of 200,000 is expected on Friday.
- WTI oil falls to its lowest level in 6 weeks, below $80 a barrel, after the release of U.S. oil inventories, which showed an unexpected increase of 7.265 million barrels.
- SMCI shares fell as much as 16% after yesterday's Q1 results release. The company disappointed on revenue and issued mixed guidance for the future.
- A similar situation is occurring with AMD. Shares fell as much as 8% against in-line results and guidance that was little different from current results.
- Amazon gained about 2% after strong financial results. Mastercard fell, while Pfizer surprised positively with results (despite YoY declines), leading to a rebound from its lowest price since 2013.
- Bitcoin continues to fall today, losing even more than 5%. After the Fed's decision, Bitcoin returned above 58,000.
- Cocoa is losing value today after yesterday's strong decline and rebound, and is trading below $8,500 per tonne.
Gold has rebounded after no-hawkish statements from Powell. Source: xStation5
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