NY Dow rebounds, dollar weakens FOMC rate hike narrowed | 2nd Financial Tankan

2/2 (Thursday) morning market trends (compared to the previous day)

traditional finance

• NY Dow: $34,092 +0.02%
• NASDAQ: $11,816 +2%
• Nikkei Stock Average: ¥27,346 +0.07%
• USD/JPY: 128.9 -0.85%
• USD Index: 101.1 -0.9%
• 10 year US Treasury yield: 3.4 -3.5% annual yield
• Gold Futures: $1,967.8 +1.1%

crypto assets

• Bitcoin: $23,727 +3%
• Ethereum: $1,642 +3.7%

Today’s New York Dow and Nasdaq continue to grow. The NY Dow had fallen by more than $500 before the FOMC policy announcement, but it fluctuated in response to Chairman Powell’s press conference.

The Federal Open Market Committee (FOMC) on the 2nd decided to raise the policy interest rate by 0.25% as expected by the market, returning to the usual rate hike pace. The interest rate hike has been reduced by 0.5% in December last year, and tightening measures are being eased.

With this rate hike, the policy interest rate has changed to 4.50-4.75% annually, but the terminal rate (final point) is 5.00-5.25%. The chairman said that the end of the rate hike cycle may be in sight, and that he is considering two more rate hikes (per 0.25% each) before suspending rate hikes, and is not considering resuming rate hikes after the suspension. It also showed signs of a shift from sect to somewhat dovish. Furthermore, while pointing out that “inflation has eased somewhat, but is still high,” he said, “I am pleased that despite the ongoing disinflation, the labor market data continue to be strong.” It is possible to bring inflation back to a stable 2% without triggering volatility.”

On the other hand, the chairman argued that if price trends were as expected, a rate cut within the year would not be appropriate, but the market seems to be maintaining expectations for a rate cut within the year.

The US January ISM manufacturing index released on the 1st fell short of expectations. It was the fifth straight month of decline and the lowest level since May 2020, just after the economic lockdown due to the pandemic. Rising interest rates and declining demand for goods were among the factors contributing to the slowdown.

• U.S. January ISM manufacturing index: 47.4 this time, forecast: 48.0, last time: 48.4
• FOMC policy rate 0.25% points this time 0.5% points last time
• February 3 (Thursday 22:30-24:00): US unemployment rate forecast 3.6%, previous 3.5%

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