Much like an insecure dork painstakingly analysing the latest social media post from his crush, the market is trying to pull apart the latest announcements from various Federal Reserve members in order to determine their true intent. Mixed messages are not uncommon for this part of the cycle, some members “increasingly confident” monetary policy is restrictive enough to drive inflation lower, others hinting at yet more future rate hikes.
Markets generally took the optimistic path. The Nasdaq Composite managed a 0.29% gain yesterday, the Dow shot up initially before settling down for a modest 0.24% gain on the day and the S&P 500 brought up the rear ending just 0.10% in the black on Tuesday. In Asia, the Hang Seng Index continued to bleed this week, falling 0.98% yesterday. In Japan, the Nikkei 225 also closed 0.12% in the red after also losing half a percentage point on Monday. European markets, sticking to the overarching theme of the week, were decidedly mixed.
There was nothing mixed about the reaction in currencies however, the DXY fell 0.44% on speculation the era of high interest rates may finally be coming to a close. USDJPY lost 0.81% on the day, now down to the 147 Yen range, recent forays above the 150 mark abandoned for the time being. It was enough for the Euro to touch $1.10 for the first time since August. Cable also gained, closing the day at $1.27.
Gold was the true outlier yesterday, gaining 1.33% on Tuesday to close above $2040 an ounce. It is now approaching the technical resistance it first started pushing against back in August 2020.
