I keep hearing that today’s FOMC announcement and press conference will be a snoozefest.
I couldn’t disagree more.
I think a major development is riding on the market's expectation for future rate cuts.
In recent weeks, the expectations for the next rate cut have moved forward.
During this time, Trump has put pressure on the Fed, and the latest CPI report showed inflation cooling.
But, the reason doesn’t matter as much as the fact that the bond market is buying the story.
The US 10-yr has fallen from about 4.8% to 4.55% in the last two weeks.
More importantly, it’s taking the US Dollar with it.
DXY is the most critical chart in the world right now and it is moving with the bond market and investors’ expectations for interest rates.
If Powell gives any indication that they are moving lower sooner today, it could be the catalyst needed to fail this breakout and send DXY back into its old range.
If the dollar rolls over here or even falls back into a sideways trend, the impact could be massive for risk assets.
And I don’t just mean US equities. I think international stocks stand to win more than anyone.
