Markets Get Weighed Down By Powell and Bullard
Rowan Crosby • 1 min read
Markets have sold off sharply yesterday thanks to a not-so dovish tone from Fed boss Jerome Powell.
At the last meeting of the FOMC, Powell suggested the door was very much open to rate cuts after a period of tightening monetary policy. However, he stopped short this time around from giving any strong signals to the market. Powell suggested:
“Against the backdrop of heightened uncertainties, the baseline outlook of my FOMC colleagues, like that of many other forecasters, remains favourable, with unemployment remaining near historic lows.”
“Inflation is expected to return to 2 per cent over time, but at a somewhat slower pace than we foresaw earlier in the year. However, the risks to this favourable baseline outlook appear to have grown.”
At this stage, markets are pricing in two further cuts starting in July. However, it appears that could well be overshooting the mark at the moment. The Fed’s Bullard suggested exactly that saying a 50bp cut would be too much for now.
BTC keeps on rallying higher and is currently above $11,600 in early Asian trade.
Asian Market Outlook
Today the main data point is the RBNZ rate decision. We are all not expecting a cut but the guidance will be the key as it has been with most central bank meetings this year.
We will have more on the RBNZ as the day progresses.