US Markets Steady Ahead of Fed – Nasdaq Up 0.2%
US markets experienced a relatively calm day yesterday as investors awaited today’s crucial rate decision from the Federal Reserve. The Dow finished marginally lower, down 0.04%, while the S&P 500 edged up 0.03%. The Nasdaq gained 0.20%, as markets braced for the Federal Open Market Committee’s (FOMC) pivotal announcement. US Treasury yields recouped some ground, with the 2-year yield climbing 4.4 basis points to 3.598%, and the benchmark 10-year yield rising 2.3 basis points to close at 3.621%. The US dollar also regained some of its recent losses, moving 0.28% higher on the DXY, following slightly better-than-expected Retail Sales data. Oil prices advanced once again, with Brent crude rising 1.31% to $73.70 per barrel, and WTI gaining 1.57% to reach $71.19. Meanwhile, gold prices retreated from all-time highs, slipping 0.51% to close at $2,569.51.
Markets Brace for FOMC Decision
Although the Federal Reserve’s meeting has been widely anticipated for what seems like weeks, today is indeed a pivotal moment for markets. Investors are prepared for significant volatility following the FOMC’s decision later today. The odds now stand at approximately 65% in favour of a 50-basis-point rate cut, a sharp rise from just 25% a few days ago. Whatever decision comes from Jerome Powell and his colleagues, the market is likely to experience substantial shifts. The US dollar saw a modest rally last night, but it remains vulnerable after recent declines. A more cautious Fed stance or a 25-basis-point cut could prompt further corrections in what is currently a sensitive market environment.
A Huge Day for Traders
Today marks a critical day for traders across global markets, with the Federal Reserve expected to deliver its first interest rate cut in years. While the macroeconomic calendar is relatively quiet during Asian trading hours, attention will turn to the UK once European markets open, with UK CPI data due to be released. Expectations are for a year-on-year figure around 2.2%, and any deviation from this could trigger movement in the pound. However, all eyes will be on the US session as markets largely overlook tier-2 Building Permits data ahead of the Fed’s crucial update towards the end of the session. Traders are expecting significant market movements following the announcement, which are likely to carry through into the Asian session tomorrow, with particular focus on the yen as the Bank of Japan delivers its own rate decision just a few hours after the Fed.
