Rates as of 0500 GMT

Market Recap

The Feds rate decision yesterday to hike by 75 bps was in line with market expectations and with what various members of the ratesetting Federal Open Market Committee FOMC had suggested before the meeting. This is right in the range of what the FOMC thinks is neutral, according to the Fed.

The key points came out in the press conference. While Fed Chair Powell stressed that the Fed remains totally committed to fighting inflation despite signs of weaker growth, he did not try to scare the market with what they were likely to do in September and after. Rather, he emphasized that the Fed will remain datadependent, that is, hiking is not on a predetermined cycle but will be decided independently at each meeting.

Despite the Feds continued insistence that inflation is still too high and more hikes will be necessary something that everyone knew already markets instead latched onto the fact that the Committee was aware of the signs of slowing growth in the economy and would therefore slow the path of tightening at some point. As a result the market lowered its estimates for future rate hikes by around 7 bps. This contributed to USD weakness, while the narrower expected spread with Japan where rates arent going anywhere any time soon helped to support JPY. Precious metals, which are adversely affected by both a stronger dollar and higher interest rates, had a great day. Silver in particular saw a 2 standarddeviation move upward….