Of course it was all about the FOMC as markets tacked around in a tight trading range on low volumes. The Fed held firm as expected in a unanimous decision, but the dots raised some concerns and we saw markets sell off and both the Dollar and yields pop led by the short end with the 2-year spiking 8 bps through 5.14%. The press conference started, and yields came in with the 30-year touching the low of the day, the 10-year came back almost unchanged and the 2 year is now only up 25bps. As usual it’s time to dissect every word uttered by J Powell. Some focus on the comment ‘we will proceedcarefully (I think mentioned 15 times) in determining the extent of additional firming, previously he said they would be "data dependent". The markets tried to re-bound but we are grinding lower as he continues to elaborate on the decision.
PROJECTIONS: The dot plot showed a median 2023 projection of one more rate hike this year, in line with expectations, though median 2024 dot was shifted up to 5.125% from 4.62%, suggesting only two rate cuts next year, or two fewer than forecast in June. The Fed also sees improvements in real GDP, the unemployment rate, and cooler core PCE inflation than previously expected, reflecting more optimism over a soft-landing scenario.