Fed all agree to hold, but mixed view on dots as outlook weakens
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Why did the Fed unanimously decide to keep rates on hold and what does it mean for markets?
The Fed agreed unanimously to keep rates on hold. The only dissenter was Donald Trump, but there are clearly fears that the economy will slow further and inflation will rise. But the general expectation is for two more cuts this year, so that kept the markets happy for a bit, but it all came down in shares a little bit towards the close. Next up is the Bank of England, one of three major central banks in the next 24 hours. Plus, whatever happens with Iran, which has the potential to really drive some market change in the The next day or two. Plus Aussie employment data today. It's Thursday, it's the 19th of June 2025. It's the morning call from NAB. Good morning. Well, the US dollar was down. Now it's picked up a bit.
It's up to ninety-eight point nine on the DXY. The Aussie is up half a percent to sixty five US cents. The pound is down 0.1%, 0.1% up for the yen, and a small fall for the Euro. Shares were higher, but we finished the session with the Dow and the SP marginally down, the Nasdaq up, but just by 0.1%. The Eurostocks 50 closed down 0.4% and the DAX down half percent. percent. The Footy one hundred up by naught point one per cent. Uh bond yields are lower just about everywhere. Ten year treasuries were down a couple of basis points, but they've climbed back out of that now. But down four basis points for German bunds, then ten year guilt yields are down five basis points. Aussie ten years yesterday at four and a quarter per cent.
This morning on futures just a couple of basis points higher than that. And oil doesn't know what to do. It seems it climbed, it fell, it climbed back again.
What insights did Tapas Strickland share about the latest Fed dot‑plot and the expectation of two more cuts this year?
Ten so uh it's a just about where it was yesterday for WTI and Brent is down a quarter percent to around seventy six thirty a barrel. So uh no move from the uh Federal Reserve. One comment uh that uh from the President that Jay Powell was stupid. Uh possibly both of those things were predicted, the comment and the uh the fact there was no move. But let's start there with Nabs Tapas Strickland in Sydney. So I tell you the dot plot was the most interesting, wasn't it? Seven now, expecting rates to stay as they are for the rest of this year, up from four in the March dot plot. But the broad expectation seems to be no, there'll be two more cuts this year.
Good morning, Phil. Uh I don't think we learnt that much from the F LMC meeting overnight. Indeed, when you look at market pricing for uh rate cut expectations, they're pretty much little changed by the end of twenty twenty five. So forty six point four basis points priced from forty five point six basis points on Tuesday, you look at yields there, they did dip lower on the initial headlines, but have pretty much reversed those those kind of moves. So I don't think for markets we learnt that much, but it As you noted, the distribution of the dot plot was probably the most interesting there. And the there's still ten FMC members who are looking to cut rates at least twice this year, and hence the reason why there's still two cuts penciled into the median dot pl dot point for twenty twenty five.
But uh it's it's a much narrower majority than in March. And uh as you noted, seven penciled in no change this year up from just four. And so when when you look at the dot plot The median dot unchanged at three point nine by the end of twenty twenty five. Uh and then also the dot plot was also lifted a little bit higher in twenty twenty six. So that's now sitting at three point six percent from three point four percent. And the twenty twenty seven dot is also a little bit higher at three point four percent from three point one percent. So
But more divided though next year, isn't it? So if you think it's divided this year, just look at next year. Six are saying we're only going to have two by the end of next year.
How did the surprise Riksbank rate cut differ from the Fed’s stance and why was it significant?
Yes, yes. And so uh uh in that sense I think um i it's it's still uncertain exactly uh the trajectory and speed of prospective cuts from the Federal Reserve. But the important thing to note is uh that uh policy is considered to be moderately restrictive.
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Chapters
8 chapters
1
Why did the Fed unanimously decide to keep rates on hold and what does it mean for markets?
0:01–1:24
2
What insights did Tapas Strickland share about the latest Fed dot‑plot and the expectation of two more cuts this year?
1:24–3:17
3
How did the surprise Riksbank rate cut differ from the Fed’s stance and why was it significant?
3:17–5:35
4
What does the recent weak US economic data (jobless claims, housing index, etc.) indicate for monetary policy?
5:35–7:55
5
Is the US dollar losing its status as the global reserve currency and what are the implications of a new world‑currency order?
7:55–10:43
6
How are reserve‑asset managers shifting away from US‑dollar assets toward gold and what could that mean for prices?
10:43–12:42
7
What are the latest Australian employment numbers and how might they affect the RBA’s outlook?
12:42–14:14
8
Why is defence spending in Australia becoming a key market theme and what opportunities could it create?
14:14–15:34