{"id":698146,"date":"2024-05-02T11:24:10","date_gmt":"2024-05-02T01:24:10","guid":{"rendered":"https:\/\/www.gomarkets.com\/?p=698146"},"modified":"2024-08-26T15:06:03","modified_gmt":"2024-08-26T05:06:03","slug":"inside-the-fed","status":"publish","type":"post","link":"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/","title":{"rendered":"Inside the Fed"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Let us open with this:\u00a0 \u201cIt\u2019s unlikely that the next policy rate move will be a hike. I\u2019d say it\u2019s unlikely,\u201d \u2013 US Chair Jay Powell<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This verbatim quote puts a lid on the movements seen in bond and interbank markets that might have overacted to recent data that has been above expectations and has led some to price hikes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The let us counter that quote with this quote: \u201cI think my expectation is that we will, over the course of this year, see inflation move back down. That\u2019s my forecast. But I think my confidence in that is lower than it was because of the data that we\u2019ve seen.\u201d \u2013 US Chair Jay Powell<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This \u2018lack of progress\u2019 is testing the board, it&#8217;s also clear that members are starting to get spooked by signs in the labour markets that employment is tight and starting to flex to the upside.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is why we use the term \u2018lid\u2019 \u2013 the lid can come off and judging by the trade in the US500 and USD over the 2 hours from when the statement was released through to the end of Powell\u2019s press conference, the lid is ajar.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-405755\" src=\"https:\/\/www.gomarkets.com\/au\/wp-content\/uploads\/2024\/05\/e1.png\" alt=\"\" width=\"908\" height=\"603\" \/><\/p>\n<p><span style=\"font-weight: 400;\">The May meeting was supposed to be the start of the Fed&#8217;s march to lower rates.\u00a0 At least that was what the pricing at the beginning of the year was telling us. As we&#8217;ve seen with the data; persistent inflation, strong employment, flat growth have clearly complicated where the Fed is now going. And the May meeting may be when the starter gun was lowered &#8211; signalling that the federal funds rate to remain at 5.25% to 5.5% for the foreseeable future.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If we look at the futures market the expected 150 basis points of rate cuts price in January, forecasted to start at the May meeting, now sits at a mere 32 basis point cut for 2024. And it&#8217;s falling further.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Risk on trading has been gorging on this idea since last October and in part explains why global indices have been so strong in the face of tough conditions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the Fed in a fix about what to do next indices are now going to have to \u2018prove\u2019 (bottom-up fundamentals) that pricing is justified, something market is now testing.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the FX front, the May Fed meeting has been taken in a different light. The lid has been taken as \u2018firmly on\u2019 and the USD has suffered for it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">DXY shows that across the pairs the USD was turfed out as those traders positioned for US Fed hikes got squeezed.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-405756\" src=\"https:\/\/www.gomarkets.com\/au\/wp-content\/uploads\/2024\/05\/e2.png\" alt=\"\" width=\"911\" height=\"608\" \/><\/p>\n<p><span style=\"font-weight: 400;\">We need to be vigilant as to which pairs we looked at. Considering the EUR, GBP, CAD and Scandinavian currencies are likely to see rate cuts from their respective central banks in the coming months the current fall in the USD may be short lived here. But currencies such as the AUD and NZD facing higher rates for longer may hold on to the gains they acquired.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The conclusion, however, is that rates are on hold and will be higher for longer. The pressure this will put into risk assets is likely to be seen in the coming months and therefore a real test for the bulls that have been driving markets since October last year.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Let us open with this:\u00a0 \u201cIt\u2019s unlikely that the next policy rate move will be a hike. I\u2019d say it\u2019s unlikely,\u201d \u2013 US Chair Jay Powell This verbatim quote puts a lid on the movements seen in bond and interbank markets that might have overacted to recent data that has been above expectations and has [&hellip;]<\/p>\n","protected":false},"author":94,"featured_media":698147,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2805],"tags":[],"class_list":["post-698146","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-central-banks"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Inside the Fed - Wixad<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Inside the Fed - Wixad\" \/>\n<meta property=\"og:description\" content=\"Let us open with this:\u00a0 \u201cIt\u2019s unlikely that the next policy rate move will be a hike. I\u2019d say it\u2019s unlikely,\u201d \u2013 US Chair Jay Powell This verbatim quote puts a lid on the movements seen in bond and interbank markets that might have overacted to recent data that has been above expectations and has [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/\" \/>\n<meta property=\"og:site_name\" content=\"Wixad\" \/>\n<meta property=\"article:published_time\" content=\"2024-05-02T01:24:10+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-08-26T05:06:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2024\/05\/AdobeStock_101073921-1024x671.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"671\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Evan Lucas\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Evan Lucas\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/\"},\"author\":{\"name\":\"Evan Lucas\",\"@id\":\"https:\/\/www.gomarkets.com\/es\/#\/schema\/person\/277545d7009c19904fb74be390ee3d73\"},\"headline\":\"Inside the Fed\",\"datePublished\":\"2024-05-02T01:24:10+00:00\",\"dateModified\":\"2024-08-26T05:06:03+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/\"},\"wordCount\":548,\"publisher\":{\"@id\":\"https:\/\/www.gomarkets.com\/es\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.gomarkets.com\/wp-content\/uploads\/2024\/05\/AdobeStock_101073921-scaled.jpeg\",\"articleSection\":[\"Central Banks\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/\",\"url\":\"https:\/\/www.gomarkets.com\/en\/articles\/central-banks\/inside-the-fed\/\",\"name\":\"Inside the Fed - 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USD decline  continues post FOMC, JPY outperforms on probable BoJ intervention","date":"2024-05-03 09:24:46","excerpt":"Let us open with this:\u00a0 \u201cIt\u2019s unlikely that the next policy rate move will be a hike. I\u2019d say it\u2019s unlikely,\u201d \u2013 US Chair Jay Powell This verbatim quote puts a lid on the movements seen in bond and interbank markets that might have overacted to recent data that has been above expectations and has ","link":"https:\/\/www.gomarkets.com\/en\/articles\/forex-trading\/fx-analysis-usd-decline-continues-post-fomc-jpy-outperforms-on-probable-boj-intervention\/","type":"next","category":"forex-trading"},"previous":{"id":697995,"slug":"fx-the-uncertain-peak-assessing-the-current-state-of-inflation-and-interest-rates","title":"FX - The Uncertain Peak: Assessing the Current State of Inflation and Interest Rates","date":"2024-04-30 08:00:19","excerpt":"Let us open with this:\u00a0 \u201cIt\u2019s unlikely that the next policy rate move will be a hike. I\u2019d say it\u2019s unlikely,\u201d \u2013 US Chair Jay Powell This verbatim quote puts a lid on the movements seen in bond and interbank markets that might have overacted to recent data that has been above expectations and has ","link":"https:\/\/www.gomarkets.com\/en\/articles\/forex-trading\/fx-the-uncertain-peak-assessing-the-current-state-of-inflation-and-interest-rates\/","type":"previous","category":"forex-trading"},"category":{"slug":"central-banks"},"_links":{"self":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/698146","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/users\/94"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/comments?post=698146"}],"version-history":[{"count":0,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/posts\/698146\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/media\/698147"}],"wp:attachment":[{"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/media?parent=698146"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/categories?post=698146"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gomarkets.com\/en\/wp-json\/wp\/v2\/tags?post=698146"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}