The FOMC minutes revealed divided views among policymakers about further interest rate hikes. Most officials saw upside risks to inflation and felt further tightening may be needed, while some cited concerns about economic risks if rates rise too high or remain higher for longer. The minutes indicated growing caution about rate hikes given uncertainty about the inflation outlook. Several policymakers advocated leaving rates unchanged in July. The minutes suggest a more patient approach to rate hikes going forward as the Fed watches incoming data on the disinflation process, which may have ended after the Consumer Price Index (CPI) rebounded to 3.2% last week.
EQUITY
Wall Street stumbled Wednesday as FOMC meeting minutes suggested divided Fed signals on rate hikes, which concerned investors already on edge about rising risks of an economic slowdown if higher borrowing costs persist. Intel stock dipped as it failed to complete its $5.4 billion takeover of Tower Semiconductor on regulatory hurdles and is expected to pay a termination fee of $353 million.
GOLD
Gold prices settled below $1900 on Thursday as the US dollar and Treasury yields rose following upbeat July homebuilding and June euro zone industrial production data. The better than expected economic data reinforced expectations of continued Federal Reserve policy tightening, boosting the dollar to mid-June highs and 10-month high Treasury yields, drawing investors away from gold.
OIL
Oil prices have fallen over the past few sessions due to concerns about slowing growth in China and further U.S. interest rate hikes reducing fuel demand, but prices ticked up slightly on Thursday after EIA data showed an unexpected draw in U.S. crude inventories despite production nearing pre-COVID levels. However, hawkish signals from the Fed's July meeting minutes pushed the dollar higher, adding further pressure on oil amid global economic slowdown worries.
CURRENCY
The Japanese yen continued to slide into 9-month lows versus the dollar, while the Chinese yuan recovered from 9-month lows amid reports of intervention by state banks to prop up the currency. Russia is also discussing forcing exporters to convert more of their foreign currency revenues as the Ruble tumbles past 100 per dollar. Currencies like the Australian dollar and Singapore dollar were pressured by weak trade data signalling a slowdown in export demand, especially from China.
