“We hold these truths to be self-evident…”
— Thomas Jefferson, Declaration of Independence, 1776
For the full dashboard, please click on ‘Download’ below:
The Fed (or technically the FOMC) declared its independence from The Don last night. In summary:
The FOMC unanimously decided to raise the target range for the federal funds rate by 25 bps.
The Committee’s projections showed that they anticipate another hike before the end of the year, before remaining on hold through 2027.
The new set of economic projections essentially showed a new reaction function with a much higher policy rate trajectory needed for a similar inflation outcome. This was underlined by an upward revision of the neutral rate.
The Spokesman-in-Chief of the Empire did of course not take long to react to this declaration of independence:
But being in the awakard situation of having appointed the leader of the rebellion himself, he of course offered Warsh an off-ramp little later.
When speaking to journalists, he first acknowledged the revolution,
“The board is very hostile. They’re very political. They’re doing the wrong thing.”
but then offered the rebel-leader to pull the his head out of the sling:
"I talked to Kevin and I said, 'you might as well vote with the board because it's not going to matter,'"
Anyway, equity markets first reacted positively to the rate hike, still believing in “one and done” but then started to turn sour during the press conference, albeit recovering by market close and beyond. Here’s the S&P mini-futures chart:
Given that many market observers expected a dovish hike, i.e. a hike but dovish speech, but in the best case got a “two and done”, a “buy the rumour, sell the fact” never happened and rates continue to raise post the announcement:
One of the main movers and gainers was the US Dollar, which profited from the unexpected ‘hawkishness’. For now, this has pushed the DXY above 100 agian:
Especially the Euro has been weak versus the Greenback, pushing the cross-rate below the 50-day moving average AND below 1.15!
Finally, Gold has been able to recover after an initial sell-off shock:
That’s all for today - May the Trend be with You!
André
A maybe useful roadmap to the US mid-term elections from BofA below:
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
Investing real money can be costly; don’t do stupid shit
Leave politics at the door—markets don’t care.
Past performance is hopefully no indication of future performance
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