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Markets live: US Fed holds rates unchanged, chance of local hike more than 75pc
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chance → hold → hike
The US Federal Reserve held interest rates unchanged at its most recent meeting, but in Australia, high inflation data suggests we're likely to hike rates.
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we → hold → rates
Disclaimer: this blog is not intended as investment advice.
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blog → intend → advice
Choose what information you see below by using filters
Five years of higher rates
Here's what the trajectory of US central bank interest rates have been for the past five years.
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trajectory → choose → years
A steep climb to attempt to control inflation kicked off by the war in Ukraine and global supply chain issues, followed by a slight deviation as conditions changed.
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conditions → attempt → deviation
What else happened overnight?
All eyes on the US central bank, but there was other news too!
- Federal Reserve keeps rates unchanged, as expected
- Microsoft, Alphabet results due after the bell
-
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Reserve → happen → bell
New Zealand rate hold sends currency lower
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hold → send → currency
Global stocks and major Wall Street indexes held gains on Wednesday after the Federal Reserve held interest rates steady, as expected, and traders awaited earnings from two titans of the AI buildout, Microsoft and Alphabet.
In a 10-2 decision, the US central bank said it would maintain its benchmark interest rate within the current 3.75%-4.00% range.
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it → hold → range
US treasury yields extended their gains after the decision.
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yields → extend → decision
US/
US stocks pared gains slightly, and spot gold prices were little-changed.
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prices → par → gains
MSCI's gauge of stocks across the globe rose 2.46 points, or 0.22%, to 1,132.20.
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gauge → rise → 1,132.20
The Fed's decision "reflects the continued balancing act between inflation concerns and an economy and employment situation that have remained relatively resilient," said Charlie Wise, head of global research at TransUnion in Chicago.
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Wise → reflect → Chicago
New Zealand's central bank surprised investors by leaving interest rates on hold, contrary to expectations for a hike, while the Bank of Canada raised rates for the first time in three years.
The European Central Bank and Bank of Japan are expected to issue policy decisions this week as well.
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Bank → surprise → decisions
Traders' attention will also turn to Thursday's US Personal Consumption Expenditures data, which could offer further insight into the trajectory of monetary policy.
"While the September dot-plot suggests just one more hike, another increase in energy prices or further strong data prints could bring additional tightening into play next year," said Kay Haigh, head of fixed income and liquidity solutions at Goldman Sachs Asset Management in New York.
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Haigh → turn → York
On Wall Street, the Dow Jones Industrial Average rose 91.54 points, or 0.17%, to 52,469.11 and the S&P 500 rose 5.42 points, or 0.08%, to 7,728.60.
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S&P → rise → 7,728.60
The Nasdaq Composite fell 43.31 points, or 0.16%, to 26,434.50.
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Composite → fall → 26,434.50
The pan-European STOXX 600 index rose 0.07%.
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index → rise → ?
AI RALLY FACES NEXT TEST
The AI rally faces its next test after the market close, when technology giants Alphabet and Microsoft are due to report earnings.
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rally → face → earnings
Investors will be looking out for signs of changing trends in capital spending, the driver of the AI boom, and scouring for evidence of returns that would justify the hefty cost of the AI build-out.
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that → look → out
A series of AI-related funding announcements from Meta, SpaceX and Broadcom this week has once again tested the market's willingness to pay for further building, though
Anthropic's filing for an initial public offering showed results that many investors regarded as stronger than expected, providing support.
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investors → relate → support
Earlier on Wednesday, the Reserve Bank of New Zealand surprised investors by keeping interest rates at 2.75% in a narrow vote, sending the kiwi down 1.2%.
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Bank → surprise → kiwi
"Today's decision shows the RBNZ is willing to surprise markets, a reminder that central banks do not take orders from markets," Carol Kong, a currency strategist at Commonwealth Bank of Australia, said.
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Kong → show → Australia
In the UK, finance minister John Healey delivered a cautious first budget, one that prioritised stability in the bond market over the kind of big spending moves that Andy Burnham talked about when he became prime minister.
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he → deliver → that
Britain's stocks, bonds and currency barely reacted to the statement, in which he pledged to stick to fiscal rules, while accepting a smaller fiscal cushion due to rising energy prices and borrowing costs.
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he → react → prices
The pound was down a touch at $1.3301, while UK government bond yields edged up.
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yields → edge → 1.3301
Israel's shekel fell 2.3%, as election results showed Prime Minister Benjamin Netanyahu's right-wing bloc performing more strongly than expected, but still falling short of a parliamentary majority.
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bloc → fall → majority
In commodities, oil prices rose after an attack on a refinery in Saudi Arabia, the world's biggest crude exporter, renewed concerns around the risks to supply in the Middle East.
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attack → rise → East
Brent crude futures 1.4% to $115.48 per barrel, as US crude rose nearly 3% to $102.86.
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crude → rise → 102.86
- Reuters
The decision was expected.
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decision → expect → ?
But the concerns are rising
So, the result of the Fed's meeting overnight was expected.
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result → rise → meeting
But that doesn't mean interest rates are on hold forever in the world's biggest economy.
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rates → mean → economy
The outcome of this week's meeting was widely expected after top Fed officials indicated they saw no rush to raise rates again following the quarter-percentage-point increase approved last month, despite inflation data in the meantime that was stronger than forecast and concerns that price pressures are broadening across the economy.
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pressures → expect → economy
Energy costs remain high, including for diesel fuel, which is a key input for shipping, agriculture, and other industries.
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which → remain → shipping
Inflation and the cost of living in general have been central to the political races that will determine whether Trump's Republican Party remains in control of both houses of Congress on November 3, or whether Democrats move into leadership positions and gain more robust oversight powers, including over the Fed.
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Democrats → determine → Fed
Financial markets are still pricing in a couple of additional rate hikes in the coming months, though with slightly less conviction than before Fed Chair Kevin Warsh spoke.
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Warsh → price → conviction
Pricing shows about an 80% chance of a rate hike at the Fed's December 8-9 meeting, with another likely by March.
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another → show → March
Inflation, which is currently around a percentage point above the Fed's target, has shown little progress in recent months.
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which → show → months
The US central bank has missed its inflation target for five and a half years, a fact that has left some officials worried that businesses and households are becoming accustomed to faster price increases and may plan for them in ways that will make inflation harder to control.
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inflation → miss → ways
- with Reuters
Fed leaves rates unchanged as it awaits 'accumulation of more information'
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it → leave → information
The US Federal Reserve held interest rates steady, as expected, opting to delay any changes to borrowing costs until after next week's mid-term elections in the nation and awaiting further data on the path of inflation.
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Reserve → hold → inflation
…and 17 more, not listed.
The Aporia
