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Why did markets show little movement despite a 50‑basis‑point Fed rate cut?
Markets didn't move a great deal at the end of last week. In fact, if you look over the week, it's hard to imagine there was a 50 basis point interest rate cut right in the middle of it. So well priced. And how are we fixed for another one? We'll look at the language from the Fed speakers on Friday and why a sharp move in the Japanese yen at the end of the week as well. And today it's Global PMI's Day at the start of a week that includes the RBA and Australia's latest monthly CPI read. It's Monday, it's the 23rd of September. September twenty twenty four, it's the morning call from Nab. Good morning. Well, the US dollar was up a little l on Friday, but over the week it was down naught point four percent.
The Australian dollar last week climbed one and a half percent, even with that slight fall that we saw on Friday. The Euro flat on Friday and up naught point eight percent over the week. The share market has been all topsy turvy, really. Friday saw a small rise in the Dow, but a naught point four percent fall in the Nasdaq and a naught point two percent drop in the S P. But for the S P that drop was for an all Time high and over the week, shares are actually up one point four percent. Ten year bond yields kept rising last week. Treasury's up three basis points on Friday and up eight over the week, with ten-year yields finishing at three point seven four percent. Two years over the week, however, up just two basis points over the week, which is interesting.
In a week when we saw interest rates fall fifty basis points, isn't it? Of course, all the moves uh down in two-year yields happened before last week, where thirty-three basis points lower than a month. month ago on two year yields. Australian ten year yields finished the week at three point nine three percent, so that's ten basis points up on the week. And oil weaker on Friday, Brent down half percent to below seventy four fifty a barrel, but it was four percent higher over the week. Gold, meanwhile, up again, up almost one one point four percent on Friday and one point seven percent over the week, repeatedly hitting new highs lately, including Friday when it got over two thousand six.
What did Fed speakers say about the recent rate cut and its effect on gold prices?
hundred dollars per ounce. Uh Nabs Taylor Nugent joins me. Interesting, isn't it? Move very little last week, even though we, you know, we were half expecting a a big cut, but it was clearly priced in. But the uh but the share market, well, it seems a little less certain all of a sudden, doesn't it?
Yeah, good good morning, Phil. I think yeah, it's interesting. You can look at that kind of, you know, one basis point move in in two year treasury yields over the week and be forgiven for not realizing that there was a a supersized Fed cut in in the middle of it. And I think it, you know, just goes to your point there. Markets had already moved a a fair way to price in um a fairly meaningful cutting cycle from the US. Um and I think what it also says is that, you know, while You know, market pricing had moved in the direction of of a fifty basis point move late last week. It wasn't wasn't fully priced, but you know, you look at the Fed dot plots, a commentary out of it and, you know, the the shape of the cutting cycle.
Yes, they did fifty in in the first meeting, but market's still looking for um, you know, policy rates to be around three percent mid mid next year. That kind of pricing is is little changed. And so You know, while they they started off fairly quickly, the the net of all of the the communication dot plots powers press conference didn't seem to suggest that that's kind of the new pace going forward and the you know, markets haven't really um reassessed their um the shape of the the cutting cycle more broadly. Although we
still are priced in, aren't we? fifty fifty again for another half pa half percentage uh cut before the end of the year.
Yeah, that's right. So, you know, the the dot the dot plot certainly didn't didn't kind of endorse a uh a fifty basis point cadence going forward, that median dot um consistent with two twenty-five basis point cuts from here, and the skew definitely um FOM a lot of FOMC participants penciling in even less.
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Chapters
8 chapters
1
Why did markets show little movement despite a 50‑basis‑point Fed rate cut?
0:01–1:46
2
What did Fed speakers say about the recent rate cut and its effect on gold prices?
1:46–3:49
3
How are investors interpreting the Fed’s future rate‑cut cadence after the latest 50‑bp cut?
3:49–6:34
4
Why did the Japanese yen plunge sharply while other currencies rose last week?
6:34–8:48
5
What do strong UK retail sales and the BoE’s hold decision indicate for the pound?
8:48–10:26
6
How does Canada’s robust retail sales compare to the UK’s, and what does it mean for their central banks?
10:26–12:01
7
What do today’s global PMI reports reveal about economic momentum in Europe and the US?
12:01–13:57
8
What impact could the Swiss National Bank policy and Japan’s CPI have on markets this week?
13:57–15:07