Fed minutes show split over September cut but Wall Street rallies. Dollar
eases from near 2-month high as focus turns to CPI report. Gold and oil
steadier after recent losses.
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Welcome to another episode of Global Market Insights, brought to you by XM.com, where we provide meaningful and informative content about the events that affect market trends and shape global markets. It's Thursday, the 10th of October, 2024, and you're listening to the Daily Comment podcast by Rafi Boyajian. I'm Maria Pashird of these, thanks for joining us at XM.com. The minutes of the Federal Reserve's September policy meeting published on Wednesday did little to end the uncertainty about the pace of rate reductions over the coming months. Policymakers were divided over whether 50 basis points was the appropriate size to begin the rate cutting cycle, and while a substantial majority of participants supported the move, it seems that some may have done so reluctantly. Fed officials were also keen to stress that September's outsized cut should not be interpreted as a signal for rapid policy easing. Nevertheless, the somewhat less-dovish than anticipated minutes did not spark much reaction in the markets, with expectations of a 25-basis-point rate cut in November falling only slightly. Shares on Wall Street briefly dipped after the minutes before recovering to finish the session higher. The S&P 500 closed at a new all-time high, suggesting investor confidence is high as traders enter the Q3 earnings season, which gets into full swing on Friday with the major bank earnings. Nvidia has been a key driver of the latest upswing on Wall Street amid strong demand for its new Blackwell AI chip, but its stock closed lower on Wednesday as the rally paused for breath. Google parent Alphabet also bucked the broader market trend as ongoing worries about the US government's efforts to split the business continue to weigh on the stock. Globally, the bullish sentiment has been bolstered lately by China's latest stimulus policies. After the disappointment about the absence of any new measures in Tuesday's press briefing, investors are hopeful there will be more details in the next scheduled announcement this Saturday. Specifically, markets want to see how Beijing will use fiscal policy to boost the economy and, in particular, the property sector. In forex markets, the US dollar was trading flat near two-month highs against a basket of major currencies, as the climb in treasury yields slowed. Against the yen, the greenback settled in the 149 region after reclaiming the handle yesterday. Markets are likely to stay in consolidation mode until the release of the US CPI report at 1230 GMT. The data is expected to show a drop in the headline figure to 2.3%, but no change in core CPI at 3.2%. Many significant upside surprises that make a rate cut in November less likely could push the dollar even higher while putting an end to the rally in US equities. Such a scenario would also be negative for gold, which has just managed to halt a week-long slide. The precious metal has been in a slow retreat as the dollar recovers from its late September lows. Heightened tensions in the Middle East have provided some support, but for oil, there's been a sharp pullback this week as Israel weighs its response to the recent Iranian attack. Oil futures are slightly higher today, but a resumption of the pullback is likely unless Israel carries out its planned retaliatory strike in the coming days. Thanks for listening. This was today's Daily Comment here at XM.com. Thank you for listening to another episode of Global Market Insights brought to you by XM.com. For more in-depth technical and fundamental analysis, be sure to visit www.xm.com/research. [BLANK_AUDIO]
