The FOMC left its official rate unchanged (target 5.25%-5.50%) at yesterday’s rate policy announcement. No change was expected so market attention was focused on the phrasing of the statement itself and Fed Chairman Powell’s post-announcement press conference. In his prepared remarks delivered at the beginning of the press conference Powell wasted no time striking a hawkish tone:
- The process of getting inflation sustainably down to 2 percent has a long way to go.
- We are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to our 2 percent goal over time.
- We remain committed to bringing inflation back down to our 2 percent goal and to keeping longer-term inflation expectations well anchored.
U.S. Treasury yields are sharply higher in the long-term tenors with the 20-year yield leading, +0.087. The benchmark 10-year yield is +12.4 basis points since Tuesday’s close and trading at fresh multi-year highs, currently 4.479%.
The USD has followed yields higher, lifting the U.S. Dollar Index by 0.42% to 105.60. The DXY gapped higher at the start of trading today, opening at 105.437 after closing yesterday at 105.12. The dollar has advanced against 9/10 of the G10 currencies, primary gains: +0.72% vs. SEK, +0.68% vs. AUD, +0.62% vs. CHF, +0.58% vs. GBP. The dollar’s lone G10 loss is -0.28% vs. JPY.
Dollar gains also span across emerging market currencies: +0.88% vs. BRL, +0.59% vs. ZAR, and +0.53% vs. MXN.
Global equity indexes are all lower and equity futures are signaling declines in the S&P500, Nasdaq100 and DOW at today’s open.
The Bank of England left rates unchanged at today’s policy announcement.
U.S. Weekly Jobless Claims for the week ending September 16th were 201k, below the 225k estimate and its lowest tally since January of this year.