Just in case you don't know, the Nasdaq finished down 3.5%, the S&P -3%, and the Dow Jones -2.5%. Yields surged on the back of a hawkish FOMC, with the 10-year breaking above 4.51%. The committee delivered a 25bp cut as expected, with one dissenter—Cleveland Fed President Hammack—voting to hold the target range unchanged. However, the more significant event was the change in the dot plot, shifting from four cuts to two next year, triggering massive risk-off moves. To put these moves into context: Wednesday saw the largest SPX selloff since August 5 and the second-largest pullback in the past two years. The VIX experienced the second-largest daily move since 2021, and the market fallout was ubiquitous.
Next up was the BoJ, which held rates at 0.25%, as most expected, with the market only pricing in a 2-3bp hike before the meeting. The board voted 8-1 to keep rates unchanged, with board member Tamura, the sole dissenter, voting for a hike due to rising upside risks to inflation. The Central Bank of the Philippines cut its key rate to 5.750%, as widely expected. Next on the agenda are the Riksbank (-25bps), Norges Bank (flat), and BoE (flat, 8-1) at midday.
In commodities, oil fell on the Fed news, and the dollar was boosted. USDJPY opens with a 156 handle, EURUSD is below 1.04, and Cable briefly touched a 1.25 handle. Gold staged a partial recovery in Asian trading after tumbling more than 2% in the previous session. Bitcoin fell to $101,267.76, Ether dropped 0.2% to $3,683.42, and the yield on 10-year Treasuries opens at 4.52%. It has been a busy night...
