FOMC Minutes indicate that Fed remains ready to raise rates to fight inflation.
Overall, the Minutes contained no surprises.
The markets show limited reaction to FOMC Minutes.
On November 21, the Federal Reserve released the minutes of the Federal Open Market Committee meeting that was held on October 31 – November 1, 2023.
According to the Minutes, participants highlighted the surprisingly strong data on real GDP, consumer spending and payroll growth. At the same time, participants noted that labor supply and labor demand were continuing to come into better balance, which is important for the Fed as tight labor market is a source of inflation.
Talking about the monetary policy, participants noted that “further tightening of monetary policy would be appropriate if incoming information indicated that progress towards the Committee’s inflation objective was insufficient.”
While some traders may be willing to interpret it as a hawkish signal, it should be noted that Fed has previously reiterated that it was ready to raise rates if necessary. At this point, the markets continue to prepare for rate cuts in the first half of the next year.
U.S. Dollar Index made an attempt to settle above the 103.70 level after the release of FOMC Minutes. It remains to be seen whether U.S. Dollar Index will be able to gain additional upside momentum as FOMC Minutes contained no surprises.
Gold remains stuck near the key $2000 level. Gold markets did not show a strong reaction to FOMC Minutes as gold traders were mostly focused on the big picture and tried to evaluate whether gold had enough demand above the $2000 mark.
SP500 settled near the 4540 level after the release of the report. Profit-taking is the key driver for major indices today as traders are willing to take some money off the table after the strong rally.
Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.