The Federal Reserve warns of stagflation and uncertainty, is not in a hurry to cut interest rates, U.S. stocks and bonds fluctuate, the dollar rises, and gold falls

Wallstreetcn
2025.05.07 19:32
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The Federal Reserve is not in a hurry to cut interest rates, warning of stagflation and uncertainty. The Nasdaq 100 once fell nearly 1%, but the decline significantly narrowed later. U.S. Treasury yields fluctuated, with not much volatility. During Powell's press conference, the U.S. dollar index generally showed an upward trend, with intraday gains expanding; gold generally showed a downward trend, with intraday losses widening

On May 7th, local time Wednesday, the Federal Reserve announced its interest rate decision, and Chairman Jerome Powell spoke. The Federal Reserve is not in a hurry to cut interest rates, warning of stagflation and uncertainty. U.S. stocks briefly hit a daily low during the session, but the decline narrowed and even turned positive at one point; U.S. Treasury yields fluctuated; the dollar generally showed an upward trend; gold generally showed a downward trend.

Before the Federal Reserve Decision Announcement

Before the May decision statement was released, U.S. stock indices fluctuated throughout the day, the 10-year U.S. Treasury yield fell during the day, and the dollar index rose during the day:

  • The S&P 500 index rose less than 0.3%, the Dow Jones Industrial Average rose 290 points, an increase of 0.7%, and the Nasdaq fell 23 points, a decrease of 0.13%. The semiconductor index rose 0.2%, and the bank index rose 0.98%. Google A fell 8.9%, Apple fell 1.73%, and Tesla rose 0.17%.
  • The yield on the 10-year U.S. Treasury bond fell by 3.5 basis points to 4.283%; the yield on the 2-year U.S. Treasury bond rose by less than 0.8 basis points, approaching a daily low of 3.7868%.
  • The dollar index rose 0.37%, the euro fell 0.31% against the dollar, the pound fell 0.33% against the dollar, the New Zealand dollar fell 0.64% against the dollar, and the dollar rose 0.73% against the yen.
  • Spot gold fell 1.2% to $3,388, and COMEX gold futures (electronic trading) fell 0.77% to $3,397.

After the Federal Reserve Decision Announcement

At 2:00 AM Beijing time on Thursday, the Federal Reserve kept its federal funds rate target range unchanged at 4.25%-4.5%. The decision statement stated that the uncertainty of the outlook has "further intensified," and the risks of rising unemployment and inflation have both increased. At this point, in addition to the Federal Reserve's interest rate decision announcement, U.S. President Trump was also speaking.

Subsequently, U.S. stocks fell, and Treasury yields declined:

  • The S&P 500 index's decline expanded to over 0.3%, the Dow's increase narrowed to 100 points, and the Nasdaq's decline expanded to over 0.7%.
  • The yield on the 10-year U.S. Treasury bond briefly fell more than 2 basis points, refreshing the daily low to below 3.26%. The yield on the 2-year U.S. Treasury bond fell by less than 2 basis points, overall turning negative during the day, refreshing the daily low to 3.7682%.
  • The dollar index briefly dipped slightly.
  • Gold prices rose briefly but still fell over 1.1%, fluctuating at a low level.

Powell's Press Conference

On the eve of Powell's press conference, the decline in U.S. stocks significantly narrowed:

  • The decline in U.S. stocks narrowed, with the Nasdaq 100's decline narrowing to about 0.5%, a significant reduction from nearly 1% just a few minutes earlier.
  • The yield on the 10-year U.S. Treasury bond rebounded after hitting a daily low.
  • The dollar index fluctuated within a narrow range during the day.
  • Gold's decline narrowed before falling again.

At 2:30 AM Beijing time on Thursday, Federal Reserve Chairman Jerome Powell held a press conference. He stated that the Federal Reserve can be patient and does not need to rush to cut interest rates, and Trump's statements "will not affect our work at all." During Powell's press conference, U.S. stocks showed little volatility:

  • The S&P 500 index fluctuated between gains and losses during the day.
  • The yield on the 10-year U.S. Treasury bond initially rose slightly and then fell back, with overall volatility remaining low.
  • The U.S. dollar index generally showed an upward trend, with intraday gains expanding.
  • Gold generally showed a downward trend, with intraday losses expanding.

Major Asset Trend Charts

The chart below shows the trend of the S&P 500 index:

The chart below shows the yield on the 10-year U.S. Treasury bond:

The chart below shows the trend of the U.S. dollar:

The chart below shows the trend of gold:

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