- While the US Fed paused its interest rate hikes in June, the key takeaway was two more increases could yet be seen during 2023.
- Markets are at an interesting stage of the normal business cycle, with all three major sectors (bonds, stocks, and commodities) showing some degree of long-term uptrends.
- Meanwhile, the US dollar index still looks to be trending down, meaning traders aren't overly concerned about possible rate hikes to come.
It was no surprise the US Federal Open Market Committee concluded its 2-day June meeting by leaving the Fed fund rate unchanged. At least to those who keep track of Chairman Powell’s comments between official meetings and the comments of various Fed Presidents. This time around Mr. Powell gave plenty of notice the Fed could pause rate hikes this month, which it did, ending a run of 10 consecutive increases. However, the comments from others that the US should expect additional hikes still rings true as part of the announcement talked about a possible two more increases in 2023 with a rate target between 5.5% and 5.75%. I had to laugh as traders overreacted to the announcement with the Dow Jones Industrial Average ($DOWI) initially falling almost 430 points before trimming its loss. When the closing bell rang, and the inane clapping had died out, the DJIA was down ‘only’ 233 points (0.7%) while the Nasdaq finished 53 points (0.4%) higher and the S&P 500 added almost 4 points.
