The Fed has been the main news story overnight, the FOMC kept rates on hold for a seventh straight meeting. However, in the Press Conference Federal Reserve, officials dialled back their expectations for interest-rate cuts this year. The Fed chair, Jerome Powell, said officials are carefully considering both upside and downside risks, emphasising a split within the committee. The “dot plot” showed seven officials expected one rate cut this year, while eight saw two, and four expected none. They raised their forecasts for inflation and referenced the earlier weaker inflation number as “encouraging”.
Market wise the session was volatile with a softer $ in the afternoon session, but a $ rally on the announcement. USDJPY fell from 157.30 to 155.80 before rallying back to 157.20, a 300 point round trip. A similar story in US yields where 10-year Treasuries finished little changed at 4.32%, the Nasdaq and the S&P both finished in positive territory +0.85% and +1.53% accordingly.
As for the day ahead, Tesla & Elon Musk will be in the news today, shareholders' vote over company control - its focus on AI projects has burned through cash. Near-term operating profits have fallen 40% in ‘24 and debt is higher. Despite this, Tesla’s CDS looks similar to its peers, namely Stellantis and Volkswagen. The EV sector as a whole is under pressure due to weak consumer demand and cheaper Asian models. Tesla have elevated inventory and needs, is the robotaxi the future? Other events in Eurozone industrial production, US PPI, initial jobless claims and New York Fed President John Williams moderates a discussion with Treasury Secretary Janet Yellen.
The Euros 2024 start tomorrow is it coming home?
