FOMC “decision” no surprise and Market Reactions-Indexes LOVE it
(As expected nuffin really before in the indexes Dow up .3% NAS down about same but metals up and energy down extending yesterday’s drops now they can move it around and fleece retail dummies who set stop losses at all the levels that everyone uses and they know it. UST 2year just above 5% prior as well and now Goldman confirms what I been saying for a while-notably that they also think the red line for rate cuts is 10y at 5% however they have already said they would do a reverse Operation Twist-opposite of 2012-but first done in 1961 I beleebs-the official clue below, but you heard it here first-entire economy built on low rates or below ZIRP if you factor inflation. Rate-cut expectations (for 2024 and 2025) have plunged significantly since the last FOMC (that is now just one 25bps rate-cut priced in for 2024). So this statement is where they have yet again said “we are making 3% the new 2%”
FOMC
“In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective."
Fed also replaces
"The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance"
with
"The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year.
Read the full issued statement below
Federal Reserve issues FOMC statement
https://www.federalreserve.gov/newsevents/pressreleases/monetary20240501a.htm
Indexes spiked, energy continues dropping,Au spikes but Ag said “meh”. UST yields dropping and 2y now below 5% by few pips…but below for now
Fed announces reduction in balance sheet runoff pace
The Federal Reserve announced plans on Wednesday to slow the speed of its balance sheet drawdown, after having spent much of the earlier part of the year warning of this shift.
The Fed said that starting on June 1 it was reducing the cap on Treasury securities it allows to mature and not be replaced to $25 billion from its current cap of up to $60 billion per month. The Fed left the cap on how many mortgage-backed securities it will allow to roll off its books at $35 billion per month, and it will reinvest any excess MBS principal payments into Treasuries. The move was announced at the end of its two-day Federal Open Market Committee meeting, at which the U.S. central bank left interest rates unchanged.
The downshift in the pace of the runoff had been widely expected, although market participants weren’t sure whether the tapering of the runoff process would happen at this week’s FOMC gathering or the one scheduled for June.
https://www.reuters.com/markets/us/fed-announces-reduction-balance-sheet-runoff-pace-2024-05-01/
https://www.kitco.com/charts/gold
https://www.kitco.com/charts/silver
https://www.cnbc.com/us-markets/
https://tradingeconomics.com/commodities
https://tradingeconomics.com/united-states/government-bond-yield
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html