Market Overview: Markets had been seeing some movement earlier today ahead of this afternoon’s FOMC meeting announcement. Gold and silver were both stronger today heading into the highly anticipated meeting, and are thus far holding gains following the announcement. Investors will now look forward to the press conference with Fed Chairwoman Janet Yellen.
Key Data Points: It’s all about the Fed today. The much anticipated September Fed meeting has now come and gone, with the central bank voting 73 to leave rates unchanged. The Fed’s “dotplot” is now pointing to a single hike in 2016 and two in 2017. Overall, the Fed Funds target has been lowered from three percent to 2.9 percent as the pace of rate hikes has been lowered.
Fed officials likely want to see continued signs of progress before hiking rates again, and may be very interested in the September jobs data due the first Friday of October.
Markets are also digesting action taken by the Bank of Japan this week. The BoJ did not push rates further into negative territory, but rather announced a bond-rate target approach.
Now that these announcements have been made, markets may find more of a rhythm again as more clarity is seen regarding the central bank’s immediate plans.
In other news today, the latest reading on MBA Mortgage Applications showed a decline from last week in both new home applications as well as refinancing.
Outside Markets: Stocks cheered on the vote to leave rates unchanged while yields erased earlier gains. Both gold and silver are seeing additional buying after the announcement, and could potentially stand to benefit from a potentially slower pace of rate hikes by the Fed.
The dollar index is seeing some moderate selling following the announcement.
The Big Picture: Today’s vote and commentary by the Fed could potentially pave the way for higher silver and gold prices. A decline in the possible pace of further hikes may work in the favor of precious metals, and could potentially pressure the dollar. Gold and silver could potentially see further buying interest even with the strong likelihood of a December rate increase by the Fed, and the notion of rates remaining low for some time may also keep a floor under stocks and risk assets.
Investors will likely keep their attention focused on the data stream, although it would seemingly take some significant misses at this point to take a December rate hike off the table.
The economy may be strengthening, but the degree to which it is gathering steam will likely be the subject of ongoing debate.