00:00 Host
We saw the market sell off on yesterday’s Fed news. Any damage done technically?
00:05 Jen
I don’t know that there was damage done, but it was definitely risk off. I think the hawkishness of uh some of the statement, how it was paired down, kind of caught investors off guard. We’re looking at the Dow two day here, and I’ll just highlight, we took a dip down on the 2:00 p.m. report. I haven’t seen that much movement off of the actual uh inform the report drop in quite a long time. So that would be the FOMC statement. And then you can see as Warsh began talking and through the end of the day, it was just kind of uh to uh to the down and to the right there. And I’m going to show you the S&P 500 we here, and you can see it’s let back up today. So we’re almost to where we were uh trading just a couple days ago at the close.
00:46 Host
Brooke, what did uh, what did you see in the bond markets off of this?
00:50 Brooke
Well, the bond market was definitely spooked. Like Jen had noted, heading into this meeting, we expected that maybe perhaps, uh Kevin Warsh would go with a more dovish tone. But instead, because he was more hawkish, we did see a reaction as you can see on your screen within the bond market. When you take a look particularly at the two-year Treasury yields, we saw some of the biggest reactions that we’ve seen since liberation day of last year. And then on top of that too, in reaction to a Fed meeting, we haven’t seen that sort of reaction since, don’t get too scared here, but since 2008. And so definitely some reaction there when you think about the short-term impact of the Federal Reserve’s policy. We also did get some movement on the 10-year T-note as well. That rose more than seven basis points. But I think that really the big question here is how soon could we see that rate hike? And now we sort of have these different takes about just how soon that could be, whether it’s July, September, October, or we’ll wait out until December for this war to really come to a close and for that ripple effect to really bleed through fully.
01:59 Host
How much did he disrupt the bullish narrative in the markets leading up to this Fed event?
02:07 Speaker A
On a short-term basis, there was a little damage. The S&P 500 failed at its 20-day moving average right around 74.88. But long-term, the market’s already in tune with this shift from rate cuts to rate hikes. I’d say the market absorbed it pretty well. Still in a bull market, very much so, but I do think there could be some turbulence here this summer, especially as we work through this 60-day peace deal with Iraq.
