Markets Nervous After FOMC Minutes
07 April 2022
As inflation rises to record levels, the Fed will be forced to tighten monetary policy faster than previously anticipated.
Yesterday's FOMC minutes confirmed the hawkish mood in the Fed, showing the committee members discussed reducing the Fed balance sheet significantly and discussed 50 basis point hikes instead of just 25 basis points.
US equity indices got crushed yesterday as the market has started to price in more rate hikes and quicker balance sheet run-off. The Nasdaq 100 index dropped more than 2%, with all three key indices trading below their 200-day moving averages.
Later today, the EU retail sales for February are due, expected to improve monthly, but worsen yearly. Additionally, the ECB monetary policy meeting accounts are on the agenda, likely undermining the EUR further as the ECB is in no rush to raise rates (despite massive inflation).
The usual Thursday's jobless claims are on schedule during the US session, expected to improve slightly.
Additionally, several FOMC members will speak today, including Bullard (usually very hawkish), Bostic, and Evans. Therefore, volatility could be elevated after their speeches.
In commodities, the WTI oil fell to 96 USD, while silver and gold remain under pressure, probably due to the rising US real yields.