- The Federal Reserve raised the fed funds target range by 25 bp to 3.75%-4.00%, the first hike since 2023, with the FOMC citing inflation pressures still above its 2% target. Chair Warsh speaks at the post-meeting press conference.
- Stock indexes held gains into the decision: the S&P 500 rose 0.30%, the Nasdaq 100 rose 0.68% and the Dow rose 0.05%. A drop in crude oil lowered bond yields and improved sentiment.
- Oct WTI crude fell more than 2% after API data showed US crude inventories jumped 7.1 million bbl and EIA data showed gasoline and distillate supplies increased. The 10-year T-note yield fell 4.1 bp to 4.961%.
- US economic data was mixed: Aug retail sales rose 1.2% m/m versus +0.8% expected, the biggest gain in five months, while the Sep NAHB housing market index fell 3 points to 32, matching a 3.75-year low.
- Chipmakers led market gains. Intel rose more than 4% on a report it is in talks with South Korea's SK Hynix to produce memory chips in the US for the first time; AMD, Marvell and Western Digital rose more than 3%.
- Overseas, UK Aug CPI rose 3.1% y/y, the largest increase in five months, and markets discount a 53% chance of a 25 bp ECB hike on October 29. The 10-year gilt yield fell 7.7 bp to 5.310%.
Quotes
“The Federal Reserve, as expected, raised interest rates today for the first time since 2023, as inflation pressures remain above its 2% target.”
“support a timelier return”
“Chipmakers are also climbing today to support broader market gains, with Intel up more than +4% after a report that the company was in talks with South Korean chipmaker SK Hynix to produce memory chips in the US for the first time.”