Federal Rates TAKE A DEEP BREATH
The Fed’s decision to hold rates today was a maestro’s pause, a moment to assess the economic symphony before the next movement. This measured approach sent ripples through the financial markets, each instrument responding with its own distinct melody.
For the bond market, it was a sustained note of relief. Yields, which have been jittery on whispers of future hikes, steadied themselves. Existing issues, particularly longer-term bonds, breathed a sigh of renewed value. This could entice investors seeking safe havens, potentially offering a counterpoint to the riskier assets.
S&P 500 was a little more conserved increasing by only 0.89% however it is important to know that it has reached a new all time high at $5224. Now the companies brace get another season of layoffs and trying to survive the rates while also preparing for cut estimated later this year or early next year 2025. In the meantime, we wait to see who bites the dust next in our favorite season of ‘Natural Selection’
The real estate market, a heavyweight in the financial orchestra, might find its tempo slightly dampened. While mortgage rates won’t plummet, a hold on hikes could prevent a significant rise, offering some solace to potential homebuyers.
Cryptocurrency, the newest kid on the Block responded by dramatically bouncing from its retracement with a sharp 4% increase across most stable coins such as Bitcoin, Ethereum, Cardano, and Solana. The cryptocurrency market is expected to react with a greater beta than historical to interest-rate decisions, following the bitcoin ETF approval on the 10th of January 2024. This inclusion made it more susceptible to changes in financial policy. Ethereum will follow suits later this year, making this asset class more traditional than ever.
Gold also grabbed his share of excitement, jumping at a typical 70° line on the daily chart.A pause in rate hikes could ease pressure on the dollar, potentially strengthening the appeal of this safe-haven asset. This morning Gold is up 1.35% following Jerome’s announcement.
As Jerome Powell always says, the decision on whether interest rates will go up or go down, basically depends on the numbers that they see in the strong labor market in the United States, has been the most stubborn in all of history, a description that would in any other timeframe be commendable however most financial experts feel that the hold on interest rates is just a deep breath at some point the fan will have to exhale.
