US stocks are drifting more to the downside. Yields are moving higher and the USD is moving higher after the FOMC meeting minutes.
Labor Market remained tight, but there are signs of some slowing:
- Labor market conditions remain tight, with robust payroll gains and low unemployment.
- Some signs observed that supply and demand in the labor market are coming into better balance.
- Expectations that employment growth will likely slow further, in line with projections of below-trend economic growth.
- Nominal wage growth shows signs of easing but is still running at a pace above what would be consistent over the longer run with the Committee’s 2 percent inflation objective.
Inflation is unacceptably high:
- Inflation is viewed as unacceptably high.
- Declines in inflation have been slower than expected.
- Core goods inflation has moderated but slowed less rapidly than expected despite easing supply chain constraints.
- Some participants noted a recent moderation in housing services inflation and expected this trend to continue. However, a few pointed to upside risks in the same outlook.
Monetary Policy remains cautious:
- There is a high degree of uncertainty regarding the cumulative effects of already-enacted monetary policy tightening and potential further tightening.
- Downside risks to economic activity and inflation include the possibility that tighter credit conditions and monetary policy will affect economic activity more than expected.
- Some participants mention the risk that longer-term inflation expectations could become unanchored due to stronger-than-expected consumer demand and a tight labor market.
- Almost all participants judged it appropriate to maintain the target range for the federal funds rate, considering the significant cumulative tightening in monetary policy and the lags with which policy affects economic activity and inflation.
A snapshot of the stock market is showing:
- Dow Industrial Average -154.0-0.45% at 34264.21. The days low reached 34226.98
- S&P index -13.63 points or -0.31% at 4442. The low for the day reached 4436.61
- NASDAQ index -41.0 points or -0.30% at 13776. The low reached 13764.25
Looking at the US debt market, with the longer and moving up the most.
- 2-year yield 4.942% +0.2 basis points
- 5-year yield 4.245%, +5.9 basis points
- 10-year yield 3.937%, +7.9 basis points
- 30-year yield 3.943%, +6.6 basis points
The price action in some of the major currency pairs:
- EURUSD: The EURUSD has moved to a new session low of 1.08522. The price earlier today fell below the 38.2% retracement at 1.08673. The next target comes against a swing area between 1.0842 and 1.0848. Below that and traders will start to look toward the 100 day and 50% retracement which are both near 1.0823 (see posts here)
- GBPUSD: The GBPUSD is back down testing the 200-hour moving average at 1.2891 (the price trades at 1.2693). Below that is a rising 100-hour moving average 1.26836. The pair is also within a swing area between 1.2681 and 1.26988. The low for the day earlier 1.2687. At the lows, the price broke below the 200-hour moving average but failed. The subsequent move to the upside stalled ahead of the low of a swing area near 1.27384 (the high price reached 1.27347). A move below the hourly moving averages of 1.2691 and 1.26836 would increase the bearish bias.