Economic Indicators & Central Banks:
- The double whammy of CPI and the FOMC proved very market moving. First, the tame CPI report elicited a very bullish response in Treasuries and on Wall Street.
- The data boosted expectations for Fed rate cuts starting as soon as September, and totaling 50 bps for the year. Then came the FOMC where the dot plot surprised with a hawkish tilt. The rates have been edging off the lows since the FOMC announcement, the indications from the dots, and Chair Powell’s press conference. While the shift in the near-term dots to just one cut this year might have reflected a slightly hawkish stance, it was offset by the more-dovish 2025 dots reflecting five cuts.
- Japanese investors sold the largest amount of foreign debt in 9 years amid a global shift in central bank policy. Net sales totaled ¥2.65 trillion ($16.9 billion) through June 7, the highest since April 2015, following purchases of ¥2.3 trillion in May.
Asian & European Open:
- Treasury yields plunged to their lowest levels since late March/early April on the data, but pared the gains after the FOMC.
- Wall Street closed mixed, though, with S&P500 to 5,421 (first time over 5,400). The Dow was fractionally lower at the close.
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European stock futures indicate a weak opening as Asian markets were weighed down by selling in Japan ahead of Friday’s central bank policy decision.
Financial Markets Performance:
- The USDIndex finished at 104.70, below the session peak of 105.30, but above the post-FOMC low of 104.25.
- USOIL edged lower after a 3-day advance as investors weighed an unexpected build in American crude stockpiles and the outlook for US monetary policy, which is expected to be tighter for longer.
- Gold steady above $2,300.
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Andria Pichidi
Market Analyst
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