Financial Markets Daily Report21 September 2023
The Fed delivered a hawkish pause yesterday, leaving interest rates unchanged but acknowledging a strong US economy. The dot-plot projects a tighter policy through 2024 and 2025, consistent with rates higher for longer. US stock indices fell and US Treasury yields rose on the news, with the yield curve flattening, while the USD appreciated.
- The Fed delivered a hawkish pause yesterday, leaving interest rates unchanged but acknowledging a strong US economy. The dot-plot projects a tighter policy through 2024 and 2025, consistent with rates higher for longer. US stock indices fell and US Treasury yields rose on the news, with the yield curve flattening, while the USD appreciated.
- Ahead of the FOMC and Powell’s speech, the European market saw sovereing bond yields fall and major stock indices rise, boosted by encouraging disinflation signals on the continent from a sharp fall in the German PPI and a strong downward surprise in UK CPI. With regards to the latter, the BoE is due to announce its policy decision today.
- In the commodities market, crude oil fell on the back of the Fed’s hawkish stance going forward, which masked supply concerns despite a draw in US inventories. The European natural gas benchmark TTF, for its part, fell on the longer-dates future references, on the news that supply risks in Norway and Australia may be easing.