Markets shift in a hawkish direction after the FOMC statement and dot plot
There is a consistent market move on the release of Warsh’s first FOMC statement. The notable thing is that the dovish bias that was in the prior statement (and had 3 dissents) is no longer there. You can argue about the content of the new statement — which is completely rewritten — but there’s no implicit or explicit hint at rate cuts. That’s in-line with what Warsh promised about not offering forward guidance.
However the statement also came with a new dot plot that saw a slim majority now seeing a rate cut this year, along with a higher path one-year and two-years out.
In response:
- S&P 500 down 36 points to 7476
- Gold down $44 ( was up $30 before the FOMC)
- US 2-year yields up 8.6 bps to 4.13%
- EUR/USD down 60 pips to 1.1545, with USD broadly stronger
New Fed Chairman Kevin Warsh will hold his first press conference at the bottom of the hour. Watch it live here:
This article was written by Adam Button at investinglive.com.