Patient Powell wants to wait and see
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What did the Fed’s unchanged interest‑rate decision mean for US equity markets?
Wait and see and watch. That's the power approach to the impacts of the tariff war. They're not seeing any impact yet, so the Fed is keeping everything on hold. And it's clear they don't have a clue what impact tariffs are gonna have on growth, jobs, or inflation. But markets seemed to like what he was saying. Shares were weaker than they picked up to the close. Meanwhile, the PBOC moved to mitigate the impacts of tariffs on their economy, and the Bank of England set to cut rates to a Today as well. It's Thursday, it's the eighth of May twenty twenty five. It's the morning call from Nab. Good morning. Well, it's been a mixed session for equities in the United States. The Dow closed up nort seven percent, nort four percent up for the S P and a quarter percent rise in the Nasdaq.
But a lot of movement in the last hour of trade. The Nasdaq, for example, started that hour, a quarter percent down. And if you want to see how varied stocks are today, Alphabet Shares down seven percent, Amazon is up two percent, Apple is down one per cent. I'll tell you why that is in just a moment. Europe uh shares are generally lower, not point six percent off the Eurostocks fifty, not point four per cent off the FTSE one hundred, and not point six percent off the DAX. Big moves in European bond yields as well, down seven basis points for ten year bunds, down six in the UK and France, whereas ten year treasury yields in the United States down just one basis point. The US dollar has bounced back, it's up naught point six percent.
The Aussie is down one percent to be
So the Fed Well it looks like equities fell on their announcement, but picked up during Jerome Powell's press conference. Nabs Gavin Friend has been watching all of this. So interesting that equities dropped on the announcement from the Fed that they would
Morning, Phil. Yeah. Uh let's just go through the high level stuff first. I think the the Fed's statement was altered from the prior meeting uh six weeks ago with the uh with the insertion of a line on its dual mandate that the committee now judges the risks of higher unemployment and higher inflation have risen.
How did Jerome Powell’s press conference influence market sentiment?
Right. That's the worst nightmare, right? It's your stagflationary environment. Now in the context of a Fed that has, you know, to now given no A real indication that the labour market is a concern and that all the focus has been on inflation, uh, you know, possibly coming down the pipe from from tariffs. That line clearly helped spur feelings the Fed isn't blind to the other side of its mandate, you know, the unemployment, the maximum employment uh side yields, which you know we have to say had just been kicked lower moments before the Fed spoke by comments from. From President Trump that he was unwilling to preemptively lower tariffs on China um at this stage. Um and they obviously pushed yields uh even lower uh on the back of that slight statement change from the Fed.
But I think the point we made at the as soon as this came out was it seemed to miss the point that at the start of the statement the Fed made its view of the last of Last week's uh negative Q one GDP print known. It said although swings in net exports have affected the data, recent indicators suggest that the econom the economic activity has continued to expand at a solid pace. So far. You wouldn't you know you wouldn't think that at a a minus naught point three, Kyonkyo annulised. So, you know, that's to say that the Fed is playing down the potential GDP weakness, and later in its press conference. Conference, uh Powell said, you know, we could see in Q two net exports higher, inventories perhaps revised up, and perhaps even upward revision to consumer spending.
He didn't dwell on the potential lower demand as a result of of the tariffs and trade uncertainty. No.
He seemed whenever he was asked about that, he seemed nervous, as though he didn't want to sort of diss the US administration. You know, he for example he was asked if there was a chance of a soft landing. Yeah. He just wasn't he wasn't comfortable at all answering that question or many similar questions, I thought.
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Chapters
8 chapters
1
What did the Fed’s unchanged interest‑rate decision mean for US equity markets?
0:01–2:19
2
How did Jerome Powell’s press conference influence market sentiment?
2:19–4:43
3
What are the key takeaways from the Fed’s revised dual‑mandate statement?
4:43–6:27
4
How is the “wait‑and‑see” stance affecting US labor‑market outlook?
6:27–8:24
5
What actions is the People’s Bank of China taking to offset tariff impacts?
8:24–10:16
6
Why is the Bank of England expected to cut rates today and what could follow?
10:16–12:50
7
How are recent UK trade‑deal announcements likely to impact GDP?
12:50–15:08
8
What upcoming economic data should investors watch for signs of inflation or slowdown?
15:08–16:27