Financial Markets reaction to the Feds statement

(June 16th, 2021 - Jason Capul)

The Federal Reserve will keep rates near zero and continue to purchase assets at their current rate, which is about $120 billion a month in assets.

In the press conference, Fed Chairman Jerome Powell continues to portray that inflation is due to mostly "transitory" factors but admits there's a risk that inflation may be more persistent than they currently expect.

Per the FOMC statement, "The path of the economy will depend significantly on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain."

In reaction to the Federal Reserve policy meeting:

The U.S. dollar index has spiked to the $91.24 handle. U.S. dollar ETFs to watch: (NYSEARCA:UUP) +0.78% and (NYSEARCA:USDU) +0.70%.

Gold slides -1.13% so far and falls below $1,835/oz. Gold ETFs to watch: (NYSEARCA:GLD) -1.29% and (NYSEARCA:GDX) -1.82%.

Furthermore, the U.S. 10-Year Treasury yield rose to 1.59% but now is sitting at 1.56%, up six basis points on the day. Treasury ETFs to watch: (NYSEARCA:TBT) +0.43%, (NYSEARCA:TBF) +1.09%.

Most of the top Federal Reserve officials now expect a rate hike sometime in 2023, moving up the likely timeline for an interest-rate move following recent signs of a strong economy and higher inflation.