The Federal Reserve exerted a hawkish pause by skipping a rate hike but raising the terminal rate to 5.6% from 5.1%. That implies 50 more basis points hikes between now and the end of the year.
The market which was thinking in terms of no change and the potential for no change in July, is now thinking they got that idea wrong. Looking at the markets:
EUSUSD falls below 200 bar MA on the 4-hour chart
- USDJPY : The USDJPY moved back above its 100 and 200-hour moving averages (between 139.52 and 139.62) and extended toward the high swing area between 140.22 and 140.44. The high price reached 140.167 and backed off. He currently is trading at 139.95.
Price before decision: 139.39
USDJPY moved back toward swing area
- GBPUSD: THe GBPUSD move to a low of 1.2626. The high price yesterday reached 1.26238. Moving below that level and then the 1.26000 level would be the next key targets, followed by the rising 100 hour moving average 1.2575.
Price before decision: 1.2683
GBPUSD falls to the highs from yesterday
The US stocks have moved lower:
- Dow industrial average is trading down -385.0 or -1.13% at 33825. Change before decision was -154 point
- S&P index is down -25.15 points or -0.57 percent at 4343.88. Change before decision was +6.4 basis points
- NASDAQ index is down -87 points or -0.65% at 13485.54. Change before decision was up 19.33 points
in the US debt market yields the yield curve flattened as short-term rates both higher while longer term rates move lower.
- 2-year yield 4.753% +5.8 basis points. Yield before decision 4.62%.
- 10-year yield 3.827% -1.2 basis points. Yield before decision 3.778%
- 30-year yield 3.894% -4.7 basis points. Yield before decision 3.88%
Is the Fed intent on breaking the economy?