STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA & Eric Criscuolo
Good morning,
A day 50+ years in the making. For those of you who aren’t at 11 Wall Street there is a blue and orange sea of humanity in lower Manhattan which has reportedly already exceeded 3 million people and that was >2 hours before the parade begins. Outside of the celebration, today is the last trading day in a holiday shortened week but it will be an interesting session as markets continue to digest yesterday’s Fed meeting, the official signing of the Iran MOU and the fact that it is a triple witch expiration and the S&P quarterly index rebalance. Expect some additional volatility and a surge in volume particularly around the close as we’ve consistently been breaking records associated with this event over the last few years given the increase in derivatives activity.
There's a new sheriff in town. In a bloodless transfer of power, Kevin Warsh assumed the Fed Chair role from Jerome Powell and quickly put his stamp on things. A unanimous vote by the FOMC left the target rate unchanged at 3.5% to 3.75%. The statement shortened dramatically (130 words from 237 for those counting) and removed the easing bias as expected. The SEP, which didn’t include projections from the Chair, evolved in a hawkish manner. The press conference had a very different tone as well. The overarching themes as we saw it were “changes are a comin”, “just the facts ma’am”, "forward guidance is a thing of the past" (well at least “not well-suited to the current policy conjuncture”), “there's a task force for that”, and a commitment to deliver price stability. Taking the eraser to the Statement and removal of forward guidance provided a lead-in to potentially dramatic changes to how the Fed operates overall. To that end, Warsh announced the creation of five task forces that will take a "fresh look" at things and make recommendations for to move the “Fed forward”. Here is the MAC Desk Fed Recap if you missed it.
There was a swift response to the changes with Treasury yields particularly at the front end of the curve moving sharply higher but notably the long end was pretty well contained (and is pulling back this morning). This from my perspective suggests that the market is giving the Chair a nod of credibility around his commitment to price stability. Keep in mind, there may also be some positioning dynamics at play here as well as yield steepener trades were very popular with his appointment, given his dovish rhetoric and expectations that he would shrink the Fed’s balance sheet. Equity markets sold off in response with major indices falling >1% giving back this week’s gains.
As investors continue to digest yesterday’s meeting yields are pulling back with a continued flattening of the curve. The 2/10 spread is at 25bps the lowest level in over a year (see Chart below). Equity futures are bouncing back reversing a good portion of yesterday’s selloff with tech stocks leading to the upside. INTC is up nearly 10% in the pre-market on Trump’s social post that said Apple was working with the company to design and build its chips in America. Apple is also raising prices due to memory chip costs (DRAM +>5%). Accenture beat EPS estimates but is under pressure (>-10%) in the pre-market as bookings came in light. The company announced several cybersecurity acquisitions. Kroger is also down over 5% after its earnings.
This morning’s initial claims were inline with expectations at 226k while continuing claims ticked up over 1.8ml. Philly Fed was inline with expectations with new orders and employment moving higher. Prices paid increased but prices received ticked down. Treasuries didn’t react much to the data. The USD index is extending to the upside.
European indices are mixed but near session highs. The FTSE 100 is underperforming falling ~1%. The BOE held rates as expected, as did Norway and Switzerland. In the UK energy and miners are lower as is exchange LSEG, which caught a downgrade. The Nikkei saw strong gains, closing up 1.7% and hitting 70K for the first time. Tech was strong (Softbank, Tokyo Electron +5%) and banks saw strong gains as well. In China Shanghai and Hang Seng Indexes were lower but other indices saw gains led by tech names in those. Hang Seng has fallen to its lowest level since last July with major components like Alibaba and Tencent lower.
Crude is continuing its downward move, falling ~2%. ICE Brent is trading ~$78 with the 200d ma just under $75. Metals are under pressure across the board with gold down 3% and testing yesterday’s lows while silver drops 5% and falls below its 200d ma. Copper is off 2%. Bitcoin is trying to stabilize after falling below $65K yesterday. ETH is slightly higher, hovering ~$1750.
Earnings:
US:
A day 50+ years in the making. For those of you who aren’t at 11 Wall Street there is a blue and orange sea of humanity in lower Manhattan which has reportedly already exceeded 3 million people and that was >2 hours before the parade begins. Outside of the celebration, today is the last trading day in a holiday shortened week but it will be an interesting session as markets continue to digest yesterday’s Fed meeting, the official signing of the Iran MOU and the fact that it is a triple witch expiration and the S&P quarterly index rebalance. Expect some additional volatility and a surge in volume particularly around the close as we’ve consistently been breaking records associated with this event over the last few years given the increase in derivatives activity.
There's a new sheriff in town. In a bloodless transfer of power, Kevin Warsh assumed the Fed Chair role from Jerome Powell and quickly put his stamp on things. A unanimous vote by the FOMC left the target rate unchanged at 3.5% to 3.75%. The statement shortened dramatically (130 words from 237 for those counting) and removed the easing bias as expected. The SEP, which didn’t include projections from the Chair, evolved in a hawkish manner. The press conference had a very different tone as well. The overarching themes as we saw it were “changes are a comin”, “just the facts ma’am”, "forward guidance is a thing of the past" (well at least “not well-suited to the current policy conjuncture”), “there's a task force for that”, and a commitment to deliver price stability. Taking the eraser to the Statement and removal of forward guidance provided a lead-in to potentially dramatic changes to how the Fed operates overall. To that end, Warsh announced the creation of five task forces that will take a "fresh look" at things and make recommendations for to move the “Fed forward”. Here is the MAC Desk Fed Recap if you missed it.
There was a swift response to the changes with Treasury yields particularly at the front end of the curve moving sharply higher but notably the long end was pretty well contained (and is pulling back this morning). This from my perspective suggests that the market is giving the Chair a nod of credibility around his commitment to price stability. Keep in mind, there may also be some positioning dynamics at play here as well as yield steepener trades were very popular with his appointment, given his dovish rhetoric and expectations that he would shrink the Fed’s balance sheet. Equity markets sold off in response with major indices falling >1% giving back this week’s gains.
As investors continue to digest yesterday’s meeting yields are pulling back with a continued flattening of the curve. The 2/10 spread is at 25bps the lowest level in over a year (see Chart below). Equity futures are bouncing back reversing a good portion of yesterday’s selloff with tech stocks leading to the upside. INTC is up nearly 10% in the pre-market on Trump’s social post that said Apple was working with the company to design and build its chips in America. Apple is also raising prices due to memory chip costs (DRAM +>5%). Accenture beat EPS estimates but is under pressure (>-10%) in the pre-market as bookings came in light. The company announced several cybersecurity acquisitions. Kroger is also down over 5% after its earnings.
This morning’s initial claims were inline with expectations at 226k while continuing claims ticked up over 1.8ml. Philly Fed was inline with expectations with new orders and employment moving higher. Prices paid increased but prices received ticked down. Treasuries didn’t react much to the data. The USD index is extending to the upside.
- US 2yr +0bps to 4.19%, 5yr -2bps to 4.24%, 10yr -4bps to 4.45%, 30yr -6bps to 4.87%
- USD index: +$0.63 to $100.50
European indices are mixed but near session highs. The FTSE 100 is underperforming falling ~1%. The BOE held rates as expected, as did Norway and Switzerland. In the UK energy and miners are lower as is exchange LSEG, which caught a downgrade. The Nikkei saw strong gains, closing up 1.7% and hitting 70K for the first time. Tech was strong (Softbank, Tokyo Electron +5%) and banks saw strong gains as well. In China Shanghai and Hang Seng Indexes were lower but other indices saw gains led by tech names in those. Hang Seng has fallen to its lowest level since last July with major components like Alibaba and Tencent lower.
Crude is continuing its downward move, falling ~2%. ICE Brent is trading ~$78 with the 200d ma just under $75. Metals are under pressure across the board with gold down 3% and testing yesterday’s lows while silver drops 5% and falls below its 200d ma. Copper is off 2%. Bitcoin is trying to stabilize after falling below $65K yesterday. ETH is slightly higher, hovering ~$1750.
Earnings:
- After-Market (Wed): SB, SWBI
- Pre-Market: ACN, KR
- After-Market: None
US:
- Initial jobless claims: 226k vs 225K cons, prior revised to 230k from 229K
- Continuing claims: 1.81ml vs 1.80ml cons, prior revised to 1.786ml from 1.795K
- Philly Fed Manufacturing: 10.3 vs 10 cons, prior -0.4
- 10:00am Leading Indicators
- 10:30am EIA nat gas inventories
- 1:00pm 5y TIPS auction
- 1:00pm Rig Count
- 4:00pm TIC Flows
- UK interest rate decision: hold at 3.75% as expected
- Indonesia rate decision: hike by 25bp to 5.75% as expected
- Taiwan rate decision: hold at 2% as expected
- UK unemployment: 4.9% vs 5.0% cons, prior 5.0%
- Switzerland rate decision: Hold at 0% as expected
- Norway rate decision: Hold at 4.25% as expected
By submitting this form you hereby expressly grant permission to use the information included thereunder to contact you for the purposes of sending periodic updates about ICE and/or its affiliates. Certain indices mentioned above are administered by ICE Data Indices, LLC.
Your contact information will not be used for any purpose other than that for which your consent has been given. To learn more about our privacy policy, please click here.
© 2025 Intercontinental Exchange, Inc. All rights reserved. Intercontinental Exchange and ICE are trademarks of Intercontinental Exchange, Inc. or its affiliates. For more information regarding registered trademarks, limitations, restrictions, and other important information, please visit intercontinentalexchange.com/terms-of-use.