Markets received a real Christmas gift yesterday as the US central bank finally signaled that interest rate hikes were done. This was accompanied by a surprisingly dovish message from Fed Chair Powell as the economic projections see 75bps of rate cuts in 2024. Market participants however are pricing in around 140-150bps for 2024, nearly double the Fed estimates.
The impact from yesterday's meeting saw risk appetite receive a shot in the arm as US indices rallied hard with the S&P 500 and the Nasdaq 100 posting fresh multi-month highs, while the Dow Jones traded at a new all-time high. Gold jumped by around $50/oz. as heightened speculation about lower US rates increased the precious metal's allure.
The US dollar is under pressure after Chair Powell's commentary and as we head into the US open the greenback is trading at a four-month low.
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