Yesterday the Fed cut its benchmark Fed Funds rate by 0.50% which was more than the 0.25% cut that the street had expected. This sparked big swings in the markets sending the Dow and S&P to new highs, before a decline into the close left the three main US indices in the red for the day.
After sleeping on the news, FOMC member forecasts of potential average cuts of 0.50% for the rest of this year and around 1.00% for next year, traders seem to have decided to take the rate cut news as positive for liquidity, overshadowing concerns that rate cuts could be a sign of a weakening economy.
Equity markets have exploded higher overnight. US index futures are soaring with NASDAQ futures up 2.1%, S&P futures up 1.6%, and Dow futures up 1.1%. Overseas, the Dax is up 1.6%, the FTSE is up 1.1%, the Nikkei rallied 2.1% and the Hang Seng gained 2.0%.
The US Dollar is getting hammered this morning indicating a shift in sentiment toward a more dovish Fed. Precious metals are soaring with Silver up 2.8%, Platinum up 1.8% and Gold up 0.6%. Cryptocurrencies are also running with Bitcoin up 4.5% and Ether up 5.4%. The British Pound is up 0.6% as the Bank of England held steady today after cutting its benchmark interest rate last meeting. The Euro is up 0.3%, while the Canadian Dollar is up 0.4%. Commodities are also climbing with US Crude Oil up 1.0% and Copper up 1.2%.
In economic news, US weekly initial jobless claims (219K vs street 230K), and the Philadelphia Fed Manufacturing Survey (1.7 vs previous -7.0) were better than expected. US existing home sales are due at 10:00 am EST. Tomorrow brings retail sales and producer prices for Canada.