Muted Market Reaction to Fed Minutes
There was a very muted reaction to Fed minutes across most markets in trading today as stock traders focused on earnings reports from market darling Nvidia. US Stock indices had a quiet day, the Dow and the S&P 500 both closing up 0.13% and the Nasdaq losing 0.32%, although the later two could change swiftly on tomorrow’s open depending on the Nvidia update. The dollar was mostly flat on the day, the FX market uninspired by the Fed notes. Treasury yields did blip up though, the 2-year adding 4.3 basis points to hit 4.655% and the 10-year gaining 4.8 basis points to 4.322%. Oil jumped up again, the WTI notching up 1.1% to $77.91 a barrel and Brent rising 0.8% to $83.03 a barrel. Gold had a relatively quiet day, trading in recent ranges, now trading at $2,025 per ounce.
Fed Minutes Confirm Less Dovish Stance
Fed Minutes once again pointed to continued concern within the Federal Open Markets Committee that cutting interest rates too soon could cause far reaching problems for the US economy. The market is now pricing in around 90 basis points of cuts for 2024 while the FOMC is advising that it should be closer to the 75-basis point mark. Foreign Exchange markets were relatively quiet in the wake of the update, but longer-term traders are now looking more closely at the interest rate differential part of the FX equation and some feel there could be more upside for the greenback in the medium term. There has been pull back across the globe on rate cut expectations, but the dollar is still probably the standout in terms of the rate and size of that move. As always, only time will tell but traders feel that we are just one major catalyst away from some big moves in the FX space.
PMI Data Bonanza for Traders Today
There is an absolute bonanza of PMI number due out across the globe today, kicking off with the Australian numbers early in the Asian session and culminating with the US data later in the day. Both Flash Services and Manufacturing numbers are due out and traders will be paying close attention to any regional differences that will give a clue for next big moves. In addition to Australia and the US we also have PMI data from Japan, France, Germany, Europe, and the UK during the course of the trading day. The New York session also sees the usual weekly unemployment claims numbers as well as the Existing Homes Sales data in the US in addition to the Canadian Retail Sales numbers which are released shortly after the open.
