FOMC minutes still showing only one rate cut but markets betting on more

The minutes from the last FOMC minutes showed Fed officials sticking to their cautious outlook with only one rate cut this year. Markets, on the other hand, are betting on more cuts, given recent data showing both a cooling economy and a slowing labour market.

Yesterday’s jobless claims number was above market estimates, while the ISM non-manufacturing PMI fell sharply to 48.8 versus last month’s 53.8 print. US Treasury yields were lower across the curve yesterday with the 10-year down 8bps at 4.43%.

The Dollar retreated quite sharply to close at 1.0786 and 1.2740 against the Euro and Pound, respectively. The softer Dollar saw the Rand recover 0.85% on the day to close at R18.42 which is where we have opened again this morning. A quiet trading day is expected today given the UK elections and US Independence Day holiday.

Commodities bounce on the back of the rate cut hopes and softer Dollar

The Gold price climbed by 1.20% yesterday, ending at $2,356, while Palladium gained over 2.0% and Platinum closed flat. On the base metal front, Copper, Nickel, and Aluminium all showed some decent gains as well. Brent crude breached the $87.00 mark, closing at $87.34, but the price eased back to $86.85 this morning as the cooling US economy started to raise demand concerns.