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November 8, 2018

Fed Holds Rates Steady, Reinforces Robust Economy

 

Fed Maintains Plan for Future Hikes

Today the Fed concluded its two-day policy meeting with the unanimous decision to leave benchmark borrowing rates unchanged at a target range of 2.00%-2.25%, as expected.  While there was no press conference at the conclusion of the meeting (to change going forward) or updated Fed dot plot, the FOMC statement released afterwards reflected a sense of shared optimism amongst the Fed members with regard to the current state of the US economy:

  • Household spending continuing to grow strongly

  • Core inflation remaining near the Fed’s 2% target

  • “Labor market has continued to strengthen and economic activity has been rising at a strong rate”

 

 

A word-for-word comparison of today’s FOMC statement vs. September’s can be found here.

 

Equities' Win Streak Ends

Major US equity indices trended lower following the FOMC meeting announcement/statement.  The tech-heavy Nasdaq (-0.53%) and S&P 500 (-0.25%) snapped their three-day winning streaks, while the DJIA (+0.04%) managed to stay marginally in the black.  US Treasurys held within a tight range throughout the trading session, with the yield on the 10-year note remaining near 3.24%.  The US dollar benefitted from the Fed continuing to voice its commitment to gradual rate, gaining 0.67% against major currencies on the day.

 

 

The Crude Slide Continues

US crude oil closed down a further 1.53% to $60.65/barrel today, marking a 9th consecutive day of declines.   WTI crude officially entered a bear market (20% below recent highs) after today’s loss, as record US production and high OPEC output continue to weigh on the market’s outlook for prices.  OPEC is set to meet on Sunday, raising the prospect of a temporary rebound in prices should the committee decide to cut production in the wake of lower than expected prices.

 

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