At 2 p.m. EST on March 17, the Federal Reserve released its FOMC interest rate resolution, policy statement and economic expectations.
After the resolution was announced, the S&P and Nasdaq losses narrowed quickly, with the S&P down 0.1% and the Nasdaq down 0.5%, and the Dow expanding to over 170 points. Gold and silver rose quickly, spot gold prices rose $10 in the short term, refreshing the daily high to $1739.39/oz, from down to up and up more than 0.3% during the day. The dollar sank, and the U.S. 10-year Treasury yield dived 3 basis points to below 1.63%.
But within 5 minutes, spot gold dived briefly, basically giving back all the gains after the interest rate resolution announcement, then turned up again by 0.5% and broke through the $1740 round figure. 10-year U.S. bond yields soared. This is enough to show that the market is nervous about Powell’s press conference at 2:30 p.m. EST.
Before the press conference, market risk sentiment was boosted, the S&P and Nasdaq both turned up, the Dow expanded to over 200 points, the dollar index turned down during the day, and the 10-year U.S. bond yield expanded to 5 basis points during the day, trading at 1.67%.
At the press conference, Powell said he needed to see real Inflation on the upside before tightening policy and said he would announce the latest notice around SLR waiver continuation in a few days, the dollar, U.S. bond yields fell, U.S. stocks, gold rose:.
The three major U.S. stock indexes expanded, with the Dow up more than 210 points, the Nasdaq up 0.7% and the S&P 500 up 0.4%.
The dollar index refreshed its daily low, down 0.53% on the day at 91.38.
The 2-year U.S. bond yield hit a new daily low of 0.1210%, down nearly 3 basis points during the day. 5-year U.S. bond yield hit a new daily low of 0.7707%, down nearly 6 basis points during the day.
The 10-year U.S. bond yield was down 3 basis points briefly, refreshing the low after the Fed resolution to 1.6286%, then traded at 1.64%. 30-year U.S. bond yield narrowed its intraday gain to 5.94 basis points.
Spot gold refreshed its daily high, expanding intra-day gains to about 1%, once rising above $1750, up more than $20 from the FOMC resolution before it was released.
Spot gold was at $1729.73 per ounce, down 0.1% for the day as the Fed resolution was about to be announced. The Dow was up 0.1% or 30 points, the Nasdaq was down 1.16% and the S&P 500 was down 0.57%. 10-year U.S. bond yields were at 1.6603%, up more than 4 basis points on the day. The dollar index was at 91.96, up 0.09% on the day.
The market wants to watch for signals from this on when the easing will end. Bond investors will pay close attention to the timing of the first interest rate hike by policymakers after the recession, as well as the $120 billion per month asset purchase program closing communication that has supported financial markets since last March.
Bank of America said the meeting will be “one of the most important events of the Fed in some Time. The Fed needs to balance the improving economic outlook and will not soon change the easing policy and justify the current policy, “a tricky exchange.
On Wednesday, March 17 before the Fed’s rate resolution was announced, the three major U.S. stock indexes only supported by cyclical stocks in the Dow opened higher, technology stocks once again led the broader market, the Nasdaq and the Nasdaq 100 are down more than 1%, the largest single-day decline in more than a week, and for the first time in three days fell.
The S&P 500 broad market fell 0.7% on the day to a one-week low and the biggest drop in two weeks. The Dow had opened 40 minutes in the U.S. stock market to rush back down and turn down during the day, then turned up again and rose more than 100 points, narrowed to more than 50 points after the lunch session.
It is worth noting that before the Fed’s interest rate resolution was announced, U.S. bond yields hit a new high:.
In the much-anticipated level of U.S. bond yields, as the anchor of asset pricing 10-year benchmark U.S. bond yields rose by up to 6.6 basis points before midday, forcing 1.69%, refreshing the nearly 14-month high since January last year. It traded at 1.664% before midday, up 4 basis points.
U.S. long bond yields increased significantly. the 30-year U.S. bond yield rose more than 5 basis points to a new high since August 2019 to 2.447%. the 20-year U.S. bond yield rose 5.7 basis points to a daily high of 2.356%, the highest since its reissue in May last year.
The two-year U.S. bond yield rose 1 basis point to 0.16 percent, the highest in a week. The yield on the five-year U.S. bond rose 2 basis points to trade at 0.85 percent, retreating from its highest since last March. The two-year/10-year U.S. bond yield spread rose above 150 basis points for the first time since 2015.
Meanwhile, a measure of market inflation expectations: the five-year U.S. bond break-even inflation rate touched a 12-year high, and the 10-year break-even inflation rate was near its highest level since 2014.
Analysis indicates that the topic of interest rates continues to be a central driver of stock market movements. The market is widely expected to acknowledge the Fed’s strong economic growth, putting its accommodative monetary policy in the spotlight, especially given the approval of new $1.9 trillion in federal stimulus spending.
Rick Rieder, chief investment officer of BlackRock’s global fixed income business, recently said that whatever Powell says at the conference will move the market. He expects the U.S. 10-year Treasury yield to continue to move higher during the year, possibly hitting 2%.
The U.S. dollar index moved higher along with U.S. bond yields, rising as high as 0.1% before midday and forcing the 92 mark, also hitting a one-week high. The dollar rose more than 0.2% against the yen, breaking through the 109 mark, the highest in nine months since last June. Bitcoin stood steady above $55,000.
Gold and silver and other precious metals prices have been suppressed by higher U.S. bond yields recently. Spot gold fell 0.4% and fell below $1,725 during the day. U.S. stocks rallied to a two-week high of $1,734 early in the session, rebounding nearly $10 from the daily low before losing the $1,730 mark.
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