Markets are a little temperamental ahead of the Fed decision later today, even though the meeting is not expected to result in anything other than a rate hold. Of course, the accompanying statement from Jerome Powell will be equally important, and will no doubt be analysed with a fine-tooth comb for clues as to the board’s next move. The Fed Chair has been characteristically tight-lipped over the last few months, to the frustration of president Trump, offering no indication as to when the liquidity tap will be loosened. For those trading in and out of Cable, a reminder that the Bank of England is expected to lower rates on the Pound by 25-bps tomorrow.
Tariffs are indeed back in the headlines and the will they won’t they between the US and China is unfolding like an ill-paced sitcom. The latest concrete development is a planned meeting this weekend in Switzerland between Treasury Secretary Scott Bessent and a delegation of Chinese representatives. Trump is maintaining a hard stance on trade deals, stating bluntly that he would set terms for trade deals that opposing countries could agree to or not. The uncertainty is causing many investors to adopt a more cautious approach this week.
US stocks fell off somewhat over the past two sessions although some of that may be simple profit taking following the impressive rally over the previous two weeks. The profit-taking in gold on the other hand has come to an abrupt end, resulting in the precious metal gaining almost $200 so far this week to reach $3,431 an ounce by yesterday night. The London and Shanghai gold markets were both closed on Monday, leaving the COMEX derivatives market to lead the way. Sentiment appears to have flipped once again this Wednesday morning however, with gold opening low and moving lower still, while US futures markets are marginally up.
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