Fed Holds Rates Steady as Two Officials Vote for a Hike

what happened

According to Market Talk, the Federal Reserve kept interest rates unchanged, a decision that was widely anticipated. Two FOMC members, Lisa Cook and Beth Hammack, voted in favor of raising rates. Chairman Warsh, as is his habit, offered no forward guidance at his press conference. The 10-year Treasury yield closed at 5.044%, up 0.052 percentage point on the day, its largest one-day gain in a month. The WSJ Dollar Index barely moved. In Asia, the Nikkei rose 0.6% to 64,354.90, supported by artificial intelligence-related shares.

why it matters

The key question for markets is whether the Fed raises rates in December. GDP and PCE inflation data due the following day could shift that view. Strong readings would likely lift the dollar and weigh on gold, while softer figures would support the metal and could ease Treasury yields.

market impact

Treasuries and the dollar: expectations of a possible December hike push yields higher

• ▲10-year US Treasuries pressure up — markets are pricing in a possible rate increase in December
• ▲US dollar pressure up — the rate differential between currencies supports the greenback

tags

instruments