Fed Signals Keep Pressure on Markets

The Morning Minutes will not be issued on Friday, June 19, and will return on Monday, June 22.

The selloff in stocks and rally in the US Dollar that began following yesterday’s Fed decision continued overseas overnight and into this morning. New Fed Chair Warsh backed away from forward guidance to increase policy flexibility, while the FOMC dot plot suggested the central bank’s next move is more likely to be a rate hike than a rate cut as inflation pressures continue to build.

Meanwhile, the US and Iran signed their agreement early to end hostilities, reopen the Strait of Hormuz, and end the US blockade while negotiations on a broader agreement continue over the next 60 days. Crude Oil continued to decline, although at a slower pace than recent days, appearing to stabilise near $75.00/bbl this morning.

The Bank of England maintained its benchmark interest rate at 3.75%, as widely expected. The vote was 7-2, with the two dissenting members favouring a rate hike.

NASDAQ futures are up 1.5% after falling 1.3% yesterday, while Dow futures are up 0.3% after declining 1.0%. In Asia, the Nikkei gained 1.7% while the Hang Seng fell 1.6%. In Europe, the DAX is down 0.5% and the FTSE is lower by 1.0%.

Crude Oil is down 2.3%, trading near $75.00/bbl. Gasoline is down 0.4%, trading near $2.90/gallon. Gold is down 2.3%, Copper is down 1.6%, and Silver is down 5.1%.

The US 10-year Treasury note yield is steady near 4.45%, while the US 30-year Treasury note yield remains near 4.90%. The US Dollar is strengthening following the Fed meeting, with metals under notable pressure. The Euro is down 0.2%, while the Loonie is down 0.1%.

Looking ahead, US markets will be closed tomorrow for the Juneteenth holiday. Quadruple Witching options expiry takes place today and could contribute to elevated market volatility heading into the long weekend.

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