S&P500 Futures stay firmer around 4,600, yields edge lower as markets expect sooner end to rate hikes

Market sentiment remains mildly bid as traders expect major central banks to end rate hike trajectory soon.
Fed announces 0.25% increase in benchmark rates, signals September lift in interest rates but fail to propel yields, US Dollar.
Earnings from Meta, Alphabet allow Wall Street to remain optimistic, S&P500 Futures follow the orders without fresh news.
China industrial profits fall, early clues for Japan inflation rise ahead of ECB, US GDP.

Anil Panchal FXStreet

The risk appetite improves on early Thursday as market players reassess the tone of the US Federal Reserve (Fed) after it matched market forecasts of a 0.25% rate hike and left the door open for further rate hikes in September if inflation improves. Also contributing to the cautious optimism is the dovish bias about the European Central Bank (ECB) and upbeat earnings from global tech giants. However, downbeat China data and cautious mood ahead of the first readings of the US Gross Domestic Product (GDP) for the second quarter (Q2) prod the optimists.

While portraying the mood, S&P500 Futures picks up bids to reverse the previous day’s pullback from a 16-month high, mildly bid near 4,604 by the press time of early Thursday in Asia. That said, the US 10-year and two-year Treasury bonds declined the previous day after the Fed’s announcements but have been steady afterward. With this, the benchmark 10-year bond coupon seesaws near 3.87% while the two-year counterpart makes rounds to 4.86% by the press time.

Elsewhere, the US Dollar Index (DXY) stays pressured for the third consecutive day while the stocks in the Asia-Pacific zone edge higher. It should be noted that the prices of Gold and Crude Oil also remain firmer during the overall cautiously optimistic markets.

On Wednesday, the US Federal Reserve (Fed) announced the widely anticipated interest rate hike toward the multi-year high in the range of 5.25%-5.50%. Following the rate decision, Fed Chairman Jerome Powell tried to lure the hawks by showing readiness for a September rate hike as he said, that the June inflation Consumer Price Index was welcomed but “was only one month's report.” It should be noted that the rejection of recession fears was also an effort to please the US Dollar buyers but failed.

Following the Fed announcements and Powell’s speech, interest rate futures marked an increasing push towards a September rate hike as the CME’s FedWatch Tool shows 23% chances of the same versus 21% marked on Tuesday and 13.7% a week ago. However, the odds of witnessing rate hikes past September have been mostly nil and hence challenge the US central bank hawks.

Elsewhere, downbeat prints of the recent Eurozone and German statistics push the ECB towards ending the monetary policy tightening soon even if the bloc’s central bank is expected to announce a 0.25% rate hike on Thursday.

Furthermore, downbeat expectations from the scheduled US Q2 GDP and Durable Goods Orders for June allow the market players to remain hopeful. It should be noted that the latest quarterly results from Facebook’s parent company Meta and Google's parent Alphabet have been promising to equity traders.

Also read: Forex Today: Dollar weakens modestly after the Fed, focus turns to ECB and US data

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD embarks on a consolidative move around 1.1600

EUR/USD rapidly leaves behind Friday’s small downtick and trades with solid gains on Monday, consolidating its daily advance around the 1.1600 region as the NA session draws to a close. Meanwhile, the improved risk appetite following the US-Iran deal and the reopening of the Strait of Hormuz continues to weigh on the US Dollar, lending support to the broader risk-linked galaxy.

GBP/USD retreats from tops, back to 1.3420

GBP/USD keeps its advance past the 1.3400 yardstick at the beginning of the week. In the meantime, Cable continues to draw support from improved market sentiment following reports that the US and Iran have reached a framework agreement aimed at ending the conflict and reopening the Strait of Hormuz.

Gold stays firm, still below $4,400

Gold builds on its recent gains on Monday, climbing well north of the $4,300 mark per troy ounce. The yellow metal benefits from renewed selling pressure on the Greenback as investors reassess the implications of the US-Iran agreement to end hostilities and reopen the Strait of Hormuz. Market participants now turn their attention to Wednesday's FOMC gathering.

Ethereum Price Forecast: BitMine continues accumulation as ETH climbs above $1,800

Ethereum (ETH) treasury firm BitMine Immersion Technologies (BMNR) expanded its holdings last week, purchasing 76,881 ETH amid weakness in the crypto market. The acquisition lifted BitMine's stash of the top altcoin to 5.62 million ETH worth $10.35 billion at the time of writing. The company claims it now holds 4.66% of ETH's circulating supply, bringing it closer to its alchemy of 5% goal.

Indonesia may have stabilised the Rupiah, but the bigger fight is not over

Bank Indonesia’s emergency rate hike has bought the Rupiah some time, but the currency’s hesitant response suggests it has not yet restored confidence. Can higher interest rates solve the Rupiah’s problem, or do the country’s challenges run deeper?

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.