FOMC Minutes: Did Markets Misread Powell’s Post-Fed Comments?

As of writing, the CME’s FedWatch tool shows that traders are pricing in an 85% chance that interest rates remain at or below current levels through the entire year, so the central bank (and the US economy more broadly) has plenty of work to do if we’re going to see much in the way of interest rate increases this year.

Market Reaction

Risk appetite was saw a slight boost following the release of the minutes, with major US stock indices now trading back above pre-Fed-meeting levels. The S&P 500 is now testing a key level of previous-support-turned-resistance at 2600, which could determine whether the next 100 points are to the upside or downside heading into Q4 earnings season.

Meanwhile, the US dollar is still the worst-performing major currency on the day (see yesterday’s article, “US Dollar: Why 2019 Could Break Bulls’ Hearts” for more on the longer-term outlook for the greenback).

(Click on image to enlarge)

Source: TradingView, FOREX.com

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