What did Powell say today and how did it affect the market?

US Federal Reserve Chairman Jerome Powell's recent statements have caused significant movements in the markets. Let's examine Powell's statements and the reactions in the markets in more detail. 👇

1⃣ Powell's Statements:

🔹 Jerome #Powell stated definitively that the US Federal Reserve will lower interest rates.

🔹 He said that his confidence in inflation reaching the 2% target has increased.

🔹 He emphasized that the labor market is cooling down from its overheated state.

🔹 He stated that the size of the #interest rate cut will be determined in line with the incoming data and the economic outlook.

2⃣ Market Reactions:

🔹 After Powell's statements, #Bitcoin increased by more than 1% and rose to $61,900.

🔹 Traditional markets also saw gains: Nasdaq gained 1.7%, S&P 500 gained 1.2% and gold gained 1%.

🔹 The 10-year Treasury yield fell 5 basis points to 3.80%.

🔹 The US #Dollar index lost 0.6%.

3⃣ Interest Rate Cut Expectations:

🔹 Whether the interest rate cut will be 25 or 50 basis points is a matter of curiosity.

🔹 Markets currently see a 25 basis point cut as more likely.

🔹 However, the probability of a 50 basis point cut has increased from 24% to 32.5% in recent days.

4⃣ Upcoming Economic Data:

🔹 August employment and inflation reports will affect the Fed's interest rate cut decision.

🔹 This data may provide a clue as to how much the FED will cut interest rates.

Powell’s statements brought a relatively positive atmosphere to the markets. What we heard today; the interest rate cut may be supportive for economic growth and investor confidence. However, inflation and labor force data will determine the FED’s final decision.