Treasuries rallied, the dollar pared gains and equities were mixed as the Federal Reserve kept interest rates unchanged and reiterated a slow pace of tightening even as the economy shows signs of improvement.
In my view, there was no real surprises in the Fed statement as it has commented many times that it is leaning towards hiking rates but the timing of such is unknown. Some think the central bank’s statement was a little more hawkish than anticipated, a view that I do not necessarily share. Any changes in monetary policy have always been data dependent and the data is suggesting greater strength.
Earnings have been mixed with several high profile companies both exceeding and missing expectations.
Generally speaking markets are essentially flat during the last five days, five days which could have produced considerable volatility if statements/results differed greatly from the consensus view.
What will happen today?
Last night the foreign markets were down. London was down 0.30%, Paris down 0.25% and Frankfurt down 0.08%. China was down 0.15%, Japan down 1.13% and Hang Sang down 0.20%.
The Dow should open flat. Will tomorrow’s preliminary release of second quarter GDP impact the averages? The 10-year is off 4/32 to yield 1.52%.
Chief Economic Strategist Managing Director
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