After sharp moves (in most cases losses) following on from the US Fed’s statement and press conference on Wednesday, many key asset prices remained under pressure yesterday.
In particular, and reflecting tighter liquidity in markets, real US bond yields (i.e. TIPS yields) have moved higher and have remained elevated relative levels earlier in the week. With that, gold, silver, copper and other commodities have fallen sharply while the US dollar index has pushed out to new local highs. The S&P500, meanwhile, is somewhat lower post the Fed, reflecting weakness in cyclical areas of the market. It’s been supported somewhat, though, by strength in the tech sector, which has been strong (e.g. with new record highs in the NASDAQ100 this week, albeit only just).
With the S&P500 having rallied into the Fed meeting, the key question now is whether it has ‘topped out’ in the near term (which is the usual behaviour of equity markets around Fed meetings/announcements). The answer, as we show in this brief clip, is borne out by the signals from our short term models. Today is light on key events and data releases, which include an EU finance ministers meeting.