Pre-Market Report – Thursday 13 June: SPI up 52 as Fed Delivers Good News on Rates

Wall Street ended mixed overnight. The S&P 500 and NASDAQ both posted record closing highs for a third consecutive session, gaining 0.85% and 1.53%, respectively, with the S&P 500 topping 5,400 for the first time in its history. The Dow fell 35 points (0.09%), losing its morning gains. Up 373 points at best. Down 126 points at worst. The FOMC meeting can be dubbed as a nothing burger, the Fed held rates as expected and pencilled in just one rate cut this year and forecast more for 2025, with the 2024 FOMC median dot showing 25bp of cuts vs 75bp prior, signalling no rush to cut rates. Inflation data came in cooler than expected as cheaper gas and other goods offset higher costs for rental housing, though remains too high for the Fed to start cutting rates before September. Treasury yields dropped, 10Y yield fell 8.4bps to 4.318% after hitting 4.25%, its lowest level since April 1st, and the 2Y yield eased 7.8bps to 4.756%. Market expectations for a September rate cut have jumped to 56.7%, up from 46.8% one day ago, after rising to ~70% in the wake of inflation data, according to CME’s FedWatch Tool.

ASX SPI up 52 Points

COMMODITIES

• Copper prices rise as cooling US inflation boosts rate cut hopes.
• Oil settles up on Mideast tension, gains curbed as interest rate cuts pushed back.
• Gold pares gains on reduced rate cut bets after Fed verdict.
• Iron ore struggles for direction as China data counters soft demand outlook.
• A fifth of copper smelting capacity suspended in May, data shows.
• Strong imports drive surprise crude stock build, fuel inventories also rise, EIA says.
• Gold rush to endure through 2024 though $3,000 mark may prove elusive.
• US imposes sanctions on several Hong Kong, UAE firms for dealing with Russian-origin gold.

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