PrintTRADING DAY-Fed almost incidental to market swirl
BY Reuters | ECONOMIC | 05:00 PM ESTBy Jamie McGeever
ORLANDO, Florida, Jan 28 (Reuters) - The dollar snapped higher and Wall Street wobbled on Wednesday, but not before the S&P 500 broke above 7,000 points for the first time, after the Federal Reserve kept interest rates on hold and flagged rising inflation risks.
More on that below. In my column today I look at who the most likely candidates are to reduce their exposure to U.S. assets as a 'Sell America' narrative gathers momentum. Countries with big nominal holdings, or countries ?with outsized exposure to U.S. markets?
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. VIEW-Fed holds rates steady ?as expected, but sees elevated inflation
2. Be careful what you wish for on a weaker dollar - Mike Dolan
3. Dire year for dollar has little light at ?end of tunnel in 2026
4. Amazon
5. The future of AI will ?be written in nuts and bolts: Anuj Ranjan
Today's ?Key Market Moves
* STOCKS: S&P 500 breaks 7,000 points barrier, South Korea and Brazil extend powerful rallies to new peaks. Europe in the red though.
* SECTORS/SHARES: In after-hours trade following
earnings
reports, Microsoft
* FX: Dollar's best day since mid-November, euro's worst day since August.
* BONDS: Treasury yields ?rise as much as 3 bps, curve bear steepens. Long-dated JGB yields dip again.
* COMMODITIES/METALS: Oil at fresh 4-month high, gold +4% through $5,300/oz, silver +3% today.
Today's Talking Points
* Hawkish veer to Fed's steer
"An absolute snoozefest." That's how TS Lombard's Dario Perkins summed up ?today's Fed meeting and Chair Jerome Powell's press conference, as the central ?bank kept rates ?on hold as expected. The steer was slightly hawkish - inflation remains elevated and the job market looks a bit sturdier - but there was little market reaction.
Traders still expect another quarter point cut by July, but aren't fully pricing in another one after ?that. This fits with Powell's view that policy is probably at the higher end of the neutral range. Chances of the next move being a hike? No one's "base case", Powell says.
* U.S. reaffirms 'strong dollar' policy
U.S. President Donald Trump, Treasury Secretary Scott Bessent and others have weighed in on the dollar's travails, and investors are nervous the selloff snowballs into a rout. Policymakers seeing their currencies supercharge in value will be too.
The dollar got some respite on Wednesday, but the selling pressure is likely to return. It is still overvalued on a long-term, fundamental basis, although by ?how much ?is open to question. The last 24 to 48 hours have seen huge swings in FX volatility. Investors should expect more of that too.
* 3 out of 4 ain't bad
U.S. tech results are rolling in, and so far, it's looking
good - investors ?cheered Meta, Tesla and IBM
First, the downside of a productivity boom - job losses.
Amazon
What could move markets tomorrow?
* Japan consumer confidence (January)
* Chinese Premier Li Qiang meets UK Prime Minister Keir Starmer
* Euro zone sentiment indices (January)
* Sweden ?interest rate decision
* U.S. Treasury auctions $44 billion of 7-year notes
* U.S. weekly jobless claims
* U.S. durable goods (November)
* U.S. trade (November)
* U.S. earnings (busiest day of the season), including Apple, Visa, Mastercard, Caterpillar, SAP, Blackstone
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Opinions expressed are those of the author. They do not reflect ?the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Jamie McGeever; Editing by Bill Berkrot)
