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The Fed was quite hawkish yesterday and we saw what kind of a reaction it triggered in the FX and equity markets. Yet despite those initial falls, index futures have already recovered to around their pre-FOMC levels at the time of writing today. The resilience of the stock market continues to surprise.
Recent trading sessions around SPX have failed to show a particularly strong sense of confidence for the equity index. Over the last four trading sessions, average price movements have barely reached 1.00%, a figure that remains below the fluctuations seen weeks ago, when daily moves above 1.5% were relatively common.
As the week draws to a close, the SPX index has so far failed to maintain a confident short-term outlook. In the current session, the index is down more than 1%, reinforcing a more consistent weakening scenario as markets await the release of annual U.S. inflation.
Yields on 10-year Treasuries have risen as much as 120 bps from the low just before the FOMC’s first rate cut of this cycle, and now it’s starting to negatively impact equities.
