Though the CME Group’s FedWatch tool continues to have the chances of a September rate cut at 98.1%, July’s meeting minutes gave investors cause for pause.
It appears that the Federal Reserve was deeply divided last month. According to the minutes, a ‘couple’ of FOMC members wanted a larger cut, while ‘several’ attendees wanted no cut at all, despite the eventual vote coming in at 8-2 in favour of slashing rates. On one aspect there appeared to be more unity – the avoidance of suggesting the central bank is ‘following a preset course’.
While certain factors may have changed things since the meeting actually occurred – the last few weeks have seen another round of trade war flare-ups AND the recession warning of an inverted yield curve – this uncertainty led to a muted session in Asian, and a similarly awkward start in Europe.
The FTSE fell 0.2%, giving up the 7200 mark it crossed on Wednesday. The DAX and CAC managed to eke out some gains, mainly because the German and French flash manufacturing and services PMIs came in at better than expected levels.
Sterling was hovering in positive territory at the start of the session, gently lifted by news of ‘frank’ talks set to take place between Boris Johnson and Emmanuel Macron this Thursday. Cable pushed 0.2% higher to graze $1.214, while against the euro the pound was unchanged at €1.0933.
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