The Federal Open Market Committee decided at its meeting yesterday to keep interest rates unchanged, as expected by markets, within a range of 3.50%–3.75%, marking the second consecutive hold. The voting results showed that one out of the 12 members favored a 25 basis point rate cut at this meeting—Stephen Miran—while the rest voted in favor of holding rates. However, the key takeaway came from the Dot Plot projections, which indicated only one rate cut this year and another one next year.
As for the Fed statement, it contained no major surprises and was largely priced in by markets. However, the press conference by Federal Reserve Chair Jerome Powell carried a hawkish tone, as he indicated that there would be no rate cuts before inflation declines, and that rates must remain restrictive to ensure inflation returns to target. He also noted that some Fed members raised the idea of rate hikes.
Powell added that the impact of geopolitical tensions in the Middle East on the economy remains unclear, and that current monetary policy is appropriate at this stage. He emphasized that the Fed will continue monitoring geopolitical developments and incoming economic data. He also highlighted that elevated energy prices could push inflation higher, putting the Fed in a difficult position that requires balancing risks. He confirmed that he does not intend to leave his position before the conclusion of the Department of Justice investigation.
How did Jerome Powell’s remarks impact financial markets?
US Equity Markets:
All major US indices closed lower:
• The S&P 500 fell by 1.36% to close at 6,625 points
• The Nasdaq 100 declined by 1.43%
• The Dow Jones dropped by 1.95%
• The Russell 2000 fell by 1.94%
The VIX volatility index surged by 12%, rising above 25 points, reflecting increased market anxiety.
US Treasury Markets:
US Treasury prices declined across maturities, pushing yields higher as follows:
• The 2-year Treasury yield rose to 3.79%, up about 2.75%, reaching its highest level since August 22, 2025
• The 10-year Treasury yield increased to 4.27%, up about 1.55%
• The 30-year Treasury yield climbed to 4.89%, up about 0.87%
Precious Metals:
Gold prices dropped by 4%, reaching $4,806, the lowest level since February 6, 2026
Silver fell by 5%, to $75, the lowest since February 18, 2026
Palladium declined by 8%, to $1,456, the lowest since December 10, 2025
Platinum also fell by 5%
Cryptocurrencies:
Bitcoin declined by 4%, reaching around $70,500
Ethereum fell by 5%, reaching around $2,150
So, who was the biggest winner?
The biggest winner was the US Dollar Index:
• It rose by 0.65%, reaching 100.31 points yesterday
As for crude oil prices, they continued to rise by 6%, reaching $112, amid ongoing geopolitical tensions, the war, and the closure of the Strait of Hormuz—a vital artery for global energy markets, through which about 20% of global oil demand and more than a quarter of seaborne oil trade pass—along with strikes on several energy facilities in Iran and the Gulf region.
Technical outlook for the Nasdaq 100:
The bearish trend in the Nasdaq 100 appears likely to persist in the near term:
• The index closed at 24,425 points yesterday, down 3% since the beginning of the year.
Technical indicators support this bearish outlook for the following reasons:
- A bearish crossover occurred between the 20-day and 50-day moving averages, signaling potential further downside
- The Relative Strength Index (RSI) is currently at 42, indicating negative momentum
- A bearish crossover between the MACD line and the signal line reinforces the likelihood of continued downside momentum
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
