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27 May 2024 | FXGT.com

Weekly Market Recap – Fed’s Higher-for-Longer Policy

  • Divergent Paths for Major U.S. Stock Indexes: The major U.S. stock indexes had mixed results this week. The Dow fell over 2.40%, ending its five-week winning streak and dropping to 39,000 points. The Nasdaq rose 1.34%, boosted by Nvidia’s strong quarterly earnings report, while the S&P 500 remained unchanged for the week, reflecting mixed sentiment across different segments of the market.
  • Fed’s Higher-for-Longer Policy: The Federal Reserve noted persistent inflation concerns and a lack of improvement, maintaining its “higher for longer” stance and readiness to tighten policy if needed. This reduced rate cut bets and supported the dollar’s recovery, with expectations for a September rate cut dropping to 50%. Consumer sentiment surveys indicate rising inflation worries despite slight easing in April’s CPI.
  • UK Inflation Exceeds Expectations: UK inflation figures exceeded expectations, influencing the Bank of England’s implied rate path. This contrasted with the European Central Bank, where expectations of a rate cut in June increased. The BoE’s stance has now become more hawkish due to persistent inflationary pressures.
  • Crude Oil Prices Hit Multi-Month Lows: Oil prices fell 2.20% this week to a three-month low due to rising U.S. crude inventories and the Fed’s hawkish stance, raising concerns about economic growth and fuel demand. All eyes are now on the OPEC+ meeting on June 1, which could influence future supply decisions.
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