The Fed held as expected, but the FOMC’s dot plot showed two fewer rate cuts in 2024 than its last dot plot. Bond yields rose, the US$ strengthened and the yen fell through 148 again.
In our bonus deep-dive interview, ANZ’s Head of Food, Beverage and Agri Insights Michael Whitehead talks about how farmers have prepared for the El Nino event declared by the BOM this week, and what it means for beef and grain prices.
5 things to know
The Fed held the Fed Funds Rate at 5.25-5.5% as expected this morning, but the FOMC’s new dot plot showed one more hike in 2023, followed by two cuts in 2024 to around 5.0%. That was two fewer cuts than projected in its last dot plot.
The US 2-year Treasury yield rose seven basis points to 5.12%, its highest level since 2006. The US dollar Index rose 0.3%. The yen fell through 148 per dollar. The A$ and NZ$ fell vs US$. US stocks fell about 1%.
UK annual inflation fell to 6.7% in August from 6.8% in July. Economists had expected a rise to about 7.0%. Swaps markets show expectations for a BoE hike tonight fell to about 50% from about 80%. The pound initially fell. The 2-year gilt fell 14 basis points to 4.85%.
NZ GDP figures due later today are likely to show 0.4% growth in the June quarter, says ANZ’s Senior Economist in New Zealand Miles Workman.
Taiwan is seen holding rates later today. ANZ’s Senior Economist and Team Head Bansi Madhavani says the worst appears over for Taiwan’s key semiconductor sector.
Cheers Bernard
PS: Look out tomorrow for the details of NZ’s GDP growth.
