Today’s meeting left rates unchanged which was already assumed by the markets. Following the statement yields were down between 3 and 4 basis points after the Fed reiterated their stance of patience. Trump has been indicating that he wants rates lower to help fuel economic growth. Gold was up $4 following the statement but quickly lost that steam, dropping about $10 after the $4 gain.
The federal reserve kept rates steady saying in the statement that the US economy is in solid shape. making it clear that they are in no rush to start adjusting rates lower. This was widely the assumed result of this round of Fed minutes. The Fed reiterated their stance of patience in today’s statement. “The [Fed] will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.” After the statement the 10- and 30-year treasuries were down between 3 and 4 basis points.
— Federal Reserve (@federalreserve) May 1, 2019
Trump wants lower rates to help jumpstart more economic growth. Trump has been trying to influence the Federal Reserve though potential nominations. Stephen Moore, one of Trump’s political supporters was one potential option, but even Republican senators were quick to reject this idea.
Presser and Price Action
In the presser following the statement, Powell says that we don’t see a strong case for rate moves either way. We saw gold up about $4 after the released statement but as Fed Chief Powell started his presser gold and the Dollar make a quick reversal, down almost $10 from the peak. This meeting was pretty set in stone prior to the meeting so what is important to watch is what the indication for the next move would be. At this point it is hard to say whether that move is up or down, markets are leaning that the first move would be down.