In a twist that caught the market off guard, the Federal Reserve delivered a dovish surprise on Wednesday. While the Federal Open Market Committee (FOMC) chose to maintain interest rates, both the committee and Fed Chairman Jerome Powell shifted away from their previously hawkish stance on monetary policy, hinting at potential future interest rate cuts. The newly unveiled “dot plots” now suggest three interest rate cuts totaling 0.75% in 2024.
This unexpected shift ignited a positive response in the markets, with U.S. stock indexes reaching new highs for the year. Gold prices surged past the $2,000 mark, the U.S. dollar index experienced a sharp decline, and Treasury yields saw a significant drop, with the 10-year note yield falling below 4%. This improved risk appetite in the overall market is expected to bolster further gains in both equities and commodity markets in the short term.
