A moderate hawkish Federal Reserve Chair Jerome Powell did not trigger a market selloff at the end. During his two days in Washington the S&P500 had 1 negative session and 1 positive, the index from Monday high to yesterday low lost 2.26% while from Monday opening and yesterday close the S&P500 lost only 1.32%. The opening on Wednesday was almost equal to yesterday close, thus is correct to say that Powell did not trigger a selloff.
Profit taking was triggered before, and buy the dip materialized yesterday, sending the CBOE VIX to 12.73, its 2023 low.
The FED probably will hike rates twice before year end, with one hike already discounted by the market as it is expecting a July hike. The ten consecutive rates hike path was interrupted this month, signaling the power of the dual mandate of the Federal Reserve. Central Bankers , excluding BoJ ‘s Ueda, are surprising the financial consensus with hikes above the level expected.
US dollar index is having its best day of the month, up 0.7% to 102.75. Investing in 1 year US Treasury is providing a nominal yield of 5.314% while on the 10 year an annual 3.740%.
Crude Oil down for the second consecutive session, trading at 68.27$/barrel, -1.76%. Relevant support in area 67, its June low. Gold making a pullback on the now resistence (was a support till yesterday) on what was its June low. The commodity is up 0.19% to 1,917.5 $/oz after 4 consecutive losing days.
Negative session for Eurozone indices, with the Manufacturing Purchasing Managers Index (PMI) released by the S&P Global and Hamburg Commercial Bank (HCOB) signaling a further deterioration of the overall economic condition. PMI figures both Composite and Manufacturing, were below the consensus. The Composite remained above 50 but only at 50.3 while the market was assuming a 52.5. Below 50 the economic outlook is bearish.
