On Wednesday, April 28, the Federal Reserve FOMC rate meeting, as expected by the market in general, did not act, keeping the accommodative monetary policy unchanged, i.e., the benchmark interest rate remained at a historic low of nearly zero and the monthly $120 billion quantitative bond purchase program proceeded as usual.
Market risk appetite was boosted after the Fed’s dovish resolution was announced.
U.S. stocks rose in the short term, with the S&P 500, the Nasdaq and the Russell 2000 small-cap index all turning higher and the Dow narrowing its decline from 150 points to less than 100 points. Bitcoin also turned up again during the day, back above the $55,000 mark.
Spot gold fell briefly by about $4, then regained $5 to $1,775, narrowing its intraday loss to less than 0.1%. The Federal Reserve said the rise in inflation mainly reflected temporary factors.
10-year U.S. bond yields intra-day gains were once further expanded, short term up about 1 basis point, then fell more than 1.5 basis points from the daily high touched just after the Fed’s interest rate resolution was announced, trading at 1.64%, the overall intra-day gain narrowed to less than 2 basis points.
Under the influence of the Fed’s dovish stance, the dollar index rose and then fell in the short term, falling nearly 20 points to 90.82 from the post-rate resolution high of 91.001. The euro rose about 30 points against the dollar in the short term to 1.2092.
During the market waiting for Powell’s speech, the major asset classes basically continued the trend just after the resolution was announced, and U.S. stocks short term gains cooled.
The Nasdaq turned up and then turned back down, the Dow re-expanded its losses to nearly 140 points, and the S&P was once again close to flat.
The dollar index turned lower and fell to a daily low, falling to 91, trading at 90.77 or down more than 0.1%. Spot gold turned up intraday at $1,776.65/oz.
U.S. bond yields rose and then fell, but long bond yields maintained intraday gains. 10-year base bond yields rose more than 2 basis points intraday to trade at 1/645%, and 30-year yields narrowed to 1 basis point, losing 2.31%. Two-year yields deepened on the downside.
But at 2:30 p.m. EST, Fed Chairman Jerome Powell’s press conference reversed the trend in broad asset classes, especially stocks and bullion surged.
Powell reiterated that the temporary uptick in inflation does not guarantee that the Fed will raise interest rates, and that now is not the time for the Fed to communicate against the reduction of QE; despite improvements in several areas of the economy after suffering the impact of the crisis of the new crown pneumonia epidemic, the recovery is still uneven and incomplete:.
The three major U.S. stock indexes once collectively turned down, the S&P 500 completely retracted the intra-day gains, the Dow fell more than 120 points, the Nasdaq fell more than 21 points or down 0.15%, the Russell 2000 small-cap index maintained a slight gain.
Within 20 minutes of the press conference, the S&P turned up strongly and broke through the 4200-point barrier, continuing to set a new intraday record high. The Dow once narrowed its decline to less than 40 points, the Nasdaq rose nearly 0.3%.
But in the press conference 40 minutes when the U.S. stocks turned down again, the S&P and the Nasdaq have turned down, the Dow fell again more than 140 points. Powell said, “Something about the stock market does reflect a market bubble.”
Spot gold briefly rose $5 and rose above $1,781, setting a new daily high and extending intra-day gains to more than 0.2%.
The dollar index continued to fall, extending its intraday loss to 0.27% at 90.61, down about 40 points from its post-Fed resolution high.
The 10-year U.S. bond yield fell more than 1 basis point in the short term and turned lower during the day, forcing 1.62% lower.
Today’s FOMC resolution was announced at 2 p.m. EST before.
U.S. stocks all turned lower. Dow fell to 150 points, the deepest intra-day drop of nearly 180 points or forced 33,800 points under the integer level; technology stocks mostly in the Nasdaq from up to nearly 0.2%, the S&P 500 once rose 0.2% and hit a new intraday high, 10 minutes before the resolution was announced to turn down.
U.S. bond yields slightly higher, 10-year benchmark U.S. bond yields traded close to 1.65%, up 2.6 basis points during the day, U.S. stocks rose up to 3 basis points at the beginning of the day, the daily high to 1.652%, a two-week high since April 13.
The U.S. bond yield curve steepened even more, buoyed by longer-term U.S. bond yields. 30-year yields rose 2 basis points and rose above 2.31% to a daily high of 2.322% or up 2.9 basis points, back above 2.30%, a one-week high. Two-year yields edged lower.
The dollar index turned from gains to losses as the Fed is expected to maintain a dovish stance, trading at 90.90 or down 0.01% before the resolution was released. U.S. stocks touched a daily high of 91.13 or up 0.2% before the bell and once stood at 91, having hit a near two-month low at 90.679 on Monday from March 3.
Spot gold fell to a one-week low, less than $ 1774 per ounce or down nearly 0.2% before the resolution was announced, U.S. stocks had touched a daily low of $ 1762.76 before the bell, the lowest since April 20, falling below the $ 1770 round figure, the deepest intraday drop of 0.8%.
Bitcoin, the world’s largest crypto-digital currency closely linked to risk appetite, stopped falling and turned up at one point to regain above $55,000. Ether (ETH), the second-largest cryptocurrency that hit an intraday high yesterday, rose 3% in 24 hours to another record high above $2,700.