Powell's hawkish speech causes U.S. stocks to turn down during trading, while the daily gains in U.S. Treasuries narrow and gold declines further

The Federal Reserve's dot plot shows that officials still expect two rate cuts this year, rather than the one that the market is worried about, which briefly boosted U.S. stocks. However, Federal Reserve Chairman Jerome Powell's pessimistic outlook for a significant rise in inflation in the coming months put pressure on U.S. stocks, causing all three major indices to briefly turn negative during the session. U.S. Treasury yields briefly hit a daily low, but the decline narrowed significantly afterward. Gold turned to a short-term rise during the day before retreating, with the decline widening

On June 18th, local time Wednesday, the Federal Reserve announced its interest rate decision. The Fed's dot plot indicates that officials still expect two rate cuts this year, rather than the one that the market is concerned about, which briefly boosted U.S. stocks and bonds. However, Fed Chairman Jerome Powell expressed a pessimistic outlook, predicting a significant rise in inflation over the next few months, which would pressure major assets.

The three major U.S. stock indices briefly turned negative during the session. U.S. Treasury yields hit a daily low but subsequently narrowed their losses significantly. Gold initially turned up during the day but then fell back, with losses widening. The dollar turned up during the day.

Before the Fed Decision Announcement

Before the release of the Fed's June FOMC interest rate decision statement, U.S. stocks rose during the day, U.S. Treasury yields fell during the day, and the dollar index declined during the day. The early morning rise in U.S. stocks was related to President Trump stating that Iran had proactively sought negotiations.

The S&P 500 index rose over 0.3%, the Dow Jones rose over 0.3%, the Nasdaq rose over 0.4%, and the Philadelphia Bank Index rose 1.9%.
The yield on the U.S. 10-year Treasury bond fell by 2.2 basis points, and the yield on the two-year Treasury bond fell by 1.9 basis points, temporarily reported at 3.9330%.
The dollar index fell by 0.1%, the dollar fell over 0.3% against the yen, rose about 0.2% against the Swiss franc, rose over 0.1% against the euro, rose about 0.1% against the pound, and rose about 0.6% against the Australian dollar.
Spot gold fell about 0.1%, and silver fell over 0.6%.

After the Fed Decision Announcement

At 02:00 Beijing time on Thursday, the Federal Reserve released the June decision statement and the Summary of Economic Projections (SEP). The Fed maintained interest rates as expected, stating that uncertainty has decreased but remains relatively high, still expecting two rate cuts this year, lowering the 2025 U.S. GDP forecast, and raising inflation expectations.

The Fed's continued expectation of two rate cuts this year, rather than the one that the market is worried about, briefly expanded gains in U.S. stocks, but the gains subsequently narrowed; U.S. bonds exhibited a similar trend, with Treasury yields initially widening their losses before narrowing again:

The S&P 500 index initially expanded its gains, then narrowed to less than 0.2%, and then fluctuated; the Philadelphia Bank Index expanded its gains to over 2.1%, and although the gains slightly narrowed, it remained significantly stronger than the broader market.
The yield on the U.S. two-year Treasury bond briefly plunged about 5 basis points, hitting a daily low close to 3.88%, and then the day's yield decline narrowed.
Spot gold rebounded from around $3,385 to above $3,395, turning to rise 0.2% during the day, but then fell back again.

After Powell's Press Conference

Fed Chairman Jerome Powell stated at the press conference that increased tariffs could push up prices in the U.S., and the impact of tariffs on inflation could be more stubborn. He expressed a pessimistic view, predicting a significant rise in inflation over the next few months.

Powell's hawkish remarks at the press conference caused all three major U.S. stock indices to turn negative, and the day's decline in Treasury yields narrowed:

All three major U.S. stock indices turned negative, with the Philadelphia Bank Index's gains narrowing to 1.6%.
The Hang Seng Index closed down 0.49% in the overnight session, reporting 235,367 points. The Hang Seng Tech Index closed down 0.69% in the overnight session, reporting 5,160 points
The yield on the U.S. two-year Treasury note narrowed its decline to less than 1 basis point, approaching 3.95%, after plunging to nearly 3.88% at 02:00 Beijing time, refreshing the daily low. The yield spread between the 2-year and 10-year U.S. Treasury notes maintained an increase of 1.6 basis points.
Spot gold fell again by over 0.3%, approaching $3,375 and refreshing the daily low of $3,370.75 at 10:31.