Powell Delays Fed Rate Cuts, Says 'We Need Greater Confidence In Inflation': 2-Year Yields Spike To 5%
Portfolio Pulse from Piero Cingari
Fed Chair Jerome Powell announced the Federal Reserve's decision to delay interest rate cuts until there is greater confidence in reaching the 2% inflation target, citing recent data showing stalled progress on inflation. This announcement led to a spike in 2-year Treasury yields to 5%, the highest in six months, and affected stock and gold prices. The SPDR S&P 500 ETF Trust (SPY) and the iShares Russell 2000 ETF (IWM) experienced declines, while the SPDR Gold Trust (GLD) remained steady.
April 16, 2024 | 6:19 pm
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NEUTRAL IMPACT
The SPDR Gold Trust (GLD) remained steady at $2,390 per ounce despite the Fed's announcement, indicating gold's resilience to the current economic policy stance.
Gold, often seen as a safe-haven asset, maintained its value as indicated by GLD's steady price. This suggests that investors may be viewing gold as a stable investment despite uncertainties in monetary policy and inflation.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
The iShares Russell 2000 ETF (IWM) experienced a 0.5% drop after the Fed's decision to hold off on rate cuts, reflecting the impact on smaller cap stocks.
IWM, representing small-cap stocks, is sensitive to interest rate expectations. The Fed's cautious stance on inflation and rate cuts led to a more pronounced decline in IWM compared to broader market indices.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 85
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) fell 0.2% following Powell's remarks on delaying rate cuts due to inflation concerns.
The SPY ETF, which tracks the S&P 500, is directly impacted by Fed policy decisions. Powell's announcement led to a negative market reaction, causing a slight decline in SPY's value.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 90