Post-Fed and CPI: Rising treasury yields, weaker gold

The Markets vs The Fed

• The FOMC decided to maintain interest rates in the 5.25-5.50% range, aligning with market expectations.
• The committee reiterated the need for greater assurance that inflation will return to target levels before considering rate cuts.
• The latest 'dot-plot' reveals a median projection of just one rate cut for the current year, a decrease from the three cuts projected in March. The members are almost evenly divided between anticipating one and two cuts in 2024.
• Despite a cautious inflation outlook and increased inflation projections from the Federal Reserve, Wall Street achieved new record highs. Investors still anticipate two rate cuts in 2024, with a 70% chance for the first cut in September.
• The Federal Reserve now forecasts four rate cuts in 2025, while planning just one cut this year, down from the three expected in March.

Asian Markets

• Sentiment in the Asian markets was weak today, particularly ahead of the Bank of Japan's interest rate announcement on Friday.

Currencies and Bond Market

10-year Treasury yields have risen to 4.325%, significantly above the previous day's low of around 4.250%. This market is experiencing considerable volatility as traders work to establish stronger positions.

The EUR/USD exchange rate climbed above 1.08 yesterday despite a stronger dollar index today.

Gold

Sentiment towards precious metals has weakened today. Silver and gold contracts are declining but gold prices remain close to $2,315 per ounce, if the momentum continues, sellers might try to target $2,300 following the Federal Reserve's hawkish stance but might remain cautious ahead of the upcoming US Producer Price Index inflation data and jobless claims.

Oil

Both Brent and WTI crude oil prices are experiencing slight declines today.