- Federal Reserve hikes rates by 75 basis points vs 75 basis points expected
- Powell opening statement: Another large hike dependent on data between now and then
- Powell Q&A: We're at neutral now
- Full FOMC statement from the July 2022 Fed meeting
- June durable goods orders +1.9% vs -0.5% expected
- US advance goods trade balance -98.18 billion vs. -104.3 billion last month
- US June pending home sales -8.6% vs -1.5% expected
- Atlanta Fed GDPNow final Q2 reading -1.2% vs -1.6% prior
- US weekly crude oil inventories -4523K vs -1037K expected
- The G7 isn't dropping plans for a Russian oil price cap. Aims for December 5. Crude dips
Markets:
- Gold up $17 to $1734
- US 10-year yields down 1 bps to 2.78%
- WTI Crude oil up $3.09 to $98.08
- S&P 500 up 102 points, or 2.6%, to 4023
- Nasdaq up 4.1% in largest gain in two years
It didn't take much for Powell turn turn markets. The statement didn't move the market much and then at the very beginning of the statement there was actually some apprehension from markets as Powell struck a dower tone and repeated lines from the statement and said "inflation is much too high" and "the labor market is much too tight."
But markets flipped when he said: "Another unusually large increase could be appropriate but it's dependent on data between now and then". Then he added: "We think it's time to go to a meeting by meeting basis and not provide clear guidance."
The odds of 75 bps in September fell to 34% from 52% afterwards and the terminal rate moved down to 3.31% from 3.38%.
Perhaps the market reaction was too much for those small moves or perhaps the bond market was ahead of stocks and FX.
The dollar fell across the board and in particular against the pound and commodity currencies but it was a generalized move. In terms of levels, AUD/USD rose to the best since mid-June and cable to the best since the first week of the month. The euro didn't cover yesterday's gains as more pipeline flows were restricted today, this time in a pipe through Ukraine.
