The Fed Flow-Through and the Banks since.
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What was the market reaction to the Fed’s latest statement and press conference?
A bit of a wind back from the rather extreme response to the Fed yesterday, but by no means a full wind back, certainly not as far as equities are concerned. So we will look at the wash-up from the Fed today. Plus, the other central banks that have met since the Bank of England, the Norge Bank, the Rix Bank, the Bank of Japan, that last minute rush before Christmas. And New Zealand's GDP numbers yesterday, are they as bad as they appear? It's Friday, it's the 20th of December. twenty twenty four. It's the morning call from Nab. Good morning. Well, a naught point three percent rise on the DXY this morning hitting a two year high overnight. The Aussie is up naught point four percent after taking a bit of a post Fed pummeling yesterday.
Uh it is back up to sixty two point four US cents today, and the pound has switched direction. It's down half percent today. It was up quite a bit after the Fed, but the yen down one point seven percent this morning after the Bank of Japan overnight. Bond yields are generally higher, up Five basis points for ten year treasuries, up six for German Bundes, but just two for UK ten year guilt yields. Aussie ten year yields yesterday were up thirteen basis points to four point four one percent. Now on futures, well he can add another ten basis points, up to four point five one percent on futures. And after that shellacking at the close yesterday, US equities, well they were trying to climb back in this session, but now they are continuing to fall.
All battles over the US debt ceiling are probably not helping a great deal here, but at the close, 0.1% down for the SP and the Nasdaq. Remember the Nasdaq fell three point six percent yesterday, all of that straight after the Fed, and it hasn't recovered. The uh the Dow just in the green, but less than one tenth of a per cent, and the Russell two thousand is down half a percent. And Europe, meanwhile, it closed on the up yesterday, but of course that was before. For the Fed. Now it's taking the lead from America, so a one point six percent drop in the Eurostocks fifty, one point four percent off the DAX, one point one percent lower for the FTSE one hundred, and oil lower again as well.
How did oil prices respond after the Fed’s move and what does Brent falling below $70 imply?
WTI is down one percent, Brent is down one point one percent. So Brent now below the seventy dollar mark. And Nabs Taylor Nugent is with me to go over all of this activity. So let's look first of all at the flow on from the Fed. Quite a reaction. election yesterday. A bit of a backtracking in equities, as I say, but even so, I mean th a surprising response yesterday, given that the Fed uh all they did was they cut their dot plot to match what markets had been expecting anyway. W it was selling you know, how it was priced in the bond market, so maybe equity investors need to pay more attention to the bond markets to see what's going on.
Yeah, good good morning, Phil. You know, a fairly big reaction, especially in equities, as you say, and you know, the the you know, not much of a a recovery today, only only very modest in in the scheme of you know the f size of the falls we saw in equity markets yesterday. Um you've also got uh curves a a little bit steeper, so a little bit of a a pullback from that increase in in two year yields, they're now back down to around four point three percent, um but curves kind of continuing to to steepen um with the The longer end yields kind of continuing to push higher. As you say, kind of that that reaction's certainly consistent with when you look over the last couple of days or the all the e the market movements since the FOMC, suggesting it was, you know, a fairly hawkish update.
As you say, you know, maybe the dot plot a little bit more hawkish than than expected, but that kind of theme that the Fed was going to be slowing down and moving more cautiously through twenty twenty five. Was certainly well known. But the dots maybe a little sent um evidently a little bit more of a hawkish signal than was expected, and you had that descent as well, and that's playing through in market movements.
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Chapters
8 chapters
1
What was the market reaction to the Fed’s latest statement and press conference?
0:01–1:57
2
How did oil prices respond after the Fed’s move and what does Brent falling below $70 imply?
1:57–4:29
3
Why are Fed officials showing hawkish dispersion in inflation forecasts?
4:29–6:35
4
Did the Bank of Japan’s press conference signal a delayed rate hike?
6:35–8:36
5
What caused dissent within the Bank of England and how might it affect future cuts?
8:36–10:30
6
Could the Riksbank implement additional rate cuts beyond the expected schedule?
10:30–12:41
7
Why did New Zealand’s Q3 GDP miss expectations and what does it mean for the economy?
12:41–14:23
8
What key data releases and market events are coming up after the holiday break?
14:23–15:39