US Stocks Bounce Back After Powell Update – Nasdaq up 0.6%
US Stock markets bounced back in trading yesterday after Jerome Powell confirmed that rate cuts will be forthcoming this year. The Dow rose 0.2%, the S&P 0.5% and once again the tech-heavy Nasdaq led the way, gaining 0.58% on the day. The dollar took a bit of a hit with the Dxy dropping 0.4%, the Euro breaching 1.0900 for the first time in several weeks. US Treasury yields were less impressed with the Fed’s Chair’s update, the benchmark 10-year dropping 3 basis points to 4.108% and the 2-year gaining 1 basis point on the day to close at 4.552%. Oil prices rallied, Brent, jumping 1.1% to $82.96 per barrel and WTI rising 1.3% to $79.13. Gold continued its recent record run to jump another 0.8% on the day, after hitting an all-time high of $2,152.09.
Dollar Drops on Powell Rate Cut Promise
The dollar had been trading in relatively moribund ranges against most of the major currencies for the last few days, but we saw a pickup in activity yesterday after the Fed Chair confirmed that we will see rate cuts later this year. Given that the market is pricing in around 75 basis points of cuts by the end of 2024 this really shouldn’t have come as much of a surprise to the market. The move lower has been attributed to the fact that some in the market were concerned that we may have seen more hawkish comments from Jerome Powell and currencies have seen a bit of a relief rally against the greenback. Traders are expecting more volatility in the FX world today, especially in the Euro with the ECB due to announce its latest rate decision.
European Central Bank in Focus for Traders Today
It’s another big day in markets today, with Asian bourses likely to start on the front foot after a strong day on Wall Street. The event calendar is relatively quiet in the APAC session but picks up later in the day. The London session sees the latest rate call from the European Central Bank with expectations that they will hold rates steady at 4.5%, traders are expecting more moves from the update in the statement and from the press conference after. The New York session sees the release of the usual weekly unemployment claims numbers from the US and then we hear more from the Fed Chair when he delivers his semi-annual Monetary Policy Report to the Senate Banking Committee. Closing out the day we have an update from the Fed’s Loretta Mester when she speaks later in a virtual speaker series.
