Market Summary

Fed Holds Rates but Hawkish Split Drives Bond Selloff: The Federal Reserve left interest rates unchanged, with Chair Kevin Warsh stressing that the decision should not be viewed as policy inertia and that markets would continue to respond to incoming economic data. Three of the Fed's 12 voting members dissented in favor of a rate hike, highlighting persistent concerns that inflation remains too high. The decision sparked another selloff in longer-dated government bonds, pushing the US 30-year Treasury yield up to 5.23%, its highest level since 2007, as investors questioned whether the Fed can bring inflation back to target. The move spilled over into Asia, where long-dated Australian, New Zealand and Japanese government bonds also came under pressure.

Technology Earnings Steady Market Sentiment: Asian equities traded broadly flat overnight following a volatile session that saw South Korea's Kospi Index swing between gains of 5.5% and losses of 2.1%. Nasdaq 100 futures rose 0.53% this morning after Microsoft gained nearly 9% in after-hours trading on the back of its strongest cloud-computing growth in four years. However, the positive sentiment was tempered by Meta Platforms, which fell 7.5% in post-market trading after issuing a disappointing revenue forecast.

Bank of England in Focus as Middle East Tensions Escalate: Markets now turn their attention to today's Bank of England policy decision, with traders assigning just a 3.1% probability of an interest rate hike while pricing a 53% chance of tightening in September. Meanwhile, geopolitical risks have intensified after the US launched fresh strikes on Iranian military targets, describing the attacks as a "heavy wave." Brent crude has risen 2.09% this morning to $92.69 per barrel, as renewed concerns over supply disruptions supported oil prices.

Gold Retreats After Strong Rally: Spot gold rose 0.99% in the previous session to $4,067 per ounce but has edged 0.84% lower this morning to around $4,036 as higher long-term Treasury yields weighed on precious metals ahead of the Bank of England's policy announcement.

Economic Calendar

• Bank of England Interest Rate Decision
• Eurozone GDP
• Eurozone Unemployment
• Eurozone Business and Consumer Sentiment
• US Jobless Claims
• German CPI
• Spain CPI
• Netherlands CPI

Key Market Moves Today

• S&P 500 Futures: +0.33%
• US 10-Year Treasury Yield: +2.45 bps (4.70%)
• Brent Crude: +2.09% ($92.69)
• Bitcoin: +0.95% ($64,050)
• Spot Gold: -0.84% ($4,036

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