Choppy day with Fed minutes and Fed’s Cook drama | investingLive
It was a two-way session that ultimately leaned lower for equities, while Treasuries finished near unchanged after giving back early gains.
The early bid in the front end came as political pressure on Fed Governor Cook intensified, but that faded into the FOMC Minutes, which read on the hawkish side with participants more worried about inflation than the labour market.
That saw the dollar trim earlier weakness and stocks dip before stabilising a bit into the close. Oil caught a bid on chunky US inventory draws.
Geopolitics stayed noisy (Russia’s rhetoric around Ukraine talks and Israel calling up 60k reservists), and in FX the kiwi continued to lag after a dovish-tilting RBNZ cut.
Equities:
US indices were mixed with a downward bias as the SPX (−0.24%), NDX (−0.58%,) and RUT (−0.32%) all traded in the red. Sector-wise, energy led while big tech softness weighed, with Consumer Discretionary and Technology underperforming. Europe was also mixed, with FTSE 100 firm and DAX softer.
FX:
The dollar index eased a touch as recent strength paused, but losses were capped by the FOMC Minutes that was read as a hawkish tone with most participants still seeing inflation risks. It’s very important to keep in mind that the minutes and the FOMC took place before the big NFP revisions, so it doesn’t really give us a clean view of the current sentiment among Fed officials.
Safe-haven CHF and JPY outperformed, while NZD underperformed after the RBNZ cut 25bp to 3.00% with two members favouring 50bp and projections lowered across the curve.
Commodities:
Crude moved higher on a EIA’s bigger-than-expected draw with WTI settling at $62.71 (+$0.94). Precious metals also saw strong upside with gold and silver putting in a decent bounce after yesterday’s fall (and that despite the USD staying firmer).
Bonds:
Treasuries whipsawed and finished little changed overall after an early front-end rally linked to the growing Cook saga with markets pondering implications for Fed independence, and then a fade on the hawkish-tinged Minutes. At the close US10Y settled around 4.297% (−0.5bp) on the session.