US Stocks Rally Despite Hawkish Fed – Nasdaq up 0.8%
US equity markets finished higher despite FOMC Meeting Minutes that struck a more hawkish tone than many participants had anticipated. The Dow Jones rose 0.26% to close at 49,662, the S&P 500 gained 0.56% to 6,881, while the Nasdaq outperformed with a 0.78% advance to 22,753. In fixed income markets, Treasury yields moved higher following the release, with the 2-year yield climbing 2.7 basis points to 3.459% and the 10-year yield rising 2.5 basis points to 4.083%. The repricing in rate expectations helped propel the DXY 0.64% higher to 97.73. Commodity markets were notably stronger. Brent surged 4.17% to $70.23, while WTI jumped 4.43% to $65.09, pushing both benchmarks toward annual highs amid renewed concerns over potential US–Iran tensions and the continued stalemate in Russia–Ukraine negotiations. Gold also attracted haven demand, rising 2.04% to $4,977.56 as geopolitical risks underpinned safe-haven flows.
Dollar Bid After Fed Meeting Minutes
The dollar surged higher in trading yesterday after the release of Fed meeting minutes that indicated that several members were open to rate hikes if inflation remains elevated. This is the first time we’ve heard mention of hikes from the committee for a long time, and it reflects a distinct split in the opinions of members on how they see the economy progressing in the coming months. The dollar pushed higher after the minutes, and traders will be watching FX closely today to see if that momentum continues. Some of the major currencies are now sitting at sensitive levels on the charts, including the Aussie, Cable, and the Euro, and if they break lower on this renewed dollar strength, we could see bigger moves in the coming sessions.
More Volatility Ahead for Traders Today
Looking ahead, volatility may increase in the sessions ahead, with markets still reacting to geopolitical updates and some key data releases scheduled. The Asian session will see an initial focus on Australian markets again, with key employment data due out. The Employment Change data is expected to show 20k new jobs last month, and the Unemployment Rate is expected to creep up to 4.2%. There is little of note on the schedule in the London session; however, traders will be keeping a close eye on any further news on the Middle East and Ukraine. The New York session sees the release of the Weekly Unemployment Claims numbers (exp. 223k) and the Philly Fed Manufacturing Index (exp. 7.5). We will also hear from Fed members Kashkari, Bostic, and Bowman during the day, with traders likely to be paying more attention to their comments given yesterday’s Fed Meeting Minutes update.
