Atlanta Fed President Raphael Bostic said Tuesday he believes the Federal Reserve has raised interest rates enough to tame inflation, suggesting further hikes may not be needed. Bostic acknowledged there is more work to do to get inflation to the Fed's 2% target, but said policy is now in a restrictive enough position and the full impact of past hikes has yet to be felt. Bostic's comments come as the Fed debates whether more interest rate increases are required before pausing, while the IMF has issued a warning about potential instabilities in the bond market, citing concerns related to rising Treasury yields, similar to the Silicon Valley Bank collapse. As of now, 84% of market participants expected the rate to pause, according to CME Fedwatch.  

EQUITY

U.S. stocks closed higher Tuesday as Treasury yields fell following dovish Fed hints at a pause as the risk of recession resurfaced. Key stocks in focus included Microsoft, which gained on Morgan Stanley optimism, while PepsiCo rose after beating earnings estimates and lifting guidance. Banks rallied ahead of earnings reports later this week, led by a jump in Truist Financial on news it may sell its insurance brokerage unit to private equity.

GOLD

Gold prices eased and hovered around $1,860 after panic safe-haven buying from geopolitical tension, although dovish comments from Federal Reserve officials weakened the dollar and Treasury yields that may boost the gold price soon. Looking ahead, the market will be eyeing the release of Fed meeting minutes and U.S. inflation data for further guidance on the monetary policy outlook.

OIL

Oil prices were down slightly on Tuesday as concerns eased about potential supply disruptions from the Israel-Palestine conflict that saw prices jump earlier this week on worries the clashes could spread and hurt Middle East oil supply, but a lack of evidence of major disruption has calmed markets. Meanwhile, the Biden administration's upcoming announcement of $7 billion in hydrogen hub grants is expected to support the transition away from fossil fuels like oil over the long term.

CURRENCY

The euro strengthened against the U.S. dollar on Wednesday following dovish comments from the Federal Reserve on the interest rate path and the prospect of economic stimulus from China. The dollar weakened broadly after the 10-year Treasury yield saw its biggest single-day drop in months on Tuesday due to the Fed statements. Safe-haven currencies like the Swiss franc and Japanese yen also gained as tensions in the Middle East drove demand.