Stock Market Update

[BRIEFING.COM] The FOMC decision is out, and it is a memorable one. As expected, the FOMC voted to cut the target range for the fed funds rate by 25 basis points to 4.00-4.25%. It was not a unanimous vote, which was also expected. The surprise, arguably, is that there was only one dissent.

The dissent was registered by newly appointed Fed Governor Miran, who preferred to cut by 50 basis points at this meeting.

The initial reaction to the decision was decidedly positive, as the directive noted that the Committee is attentive to both sides of its dual mandate [but] judges that downside risks to employment have risen. The connection is that the downside risk to employment was highlighted as opposed to an upside risk for inflation.

The knee-jerk gains, however, were quickly wiped away in some typical post-decision volatility. The catalyst for the reversal, ostensibly, was the recognition in the Summary of Economic Projections that (a) it is still a close call for two more cuts this year, with nine of the 19 participants projecting only one more rate cut this year, 10 participants seeing two, and one official who did not want rates cut at all and (b) that the 2026 median projection sees only one rate cut in 2026 versus the three rate cuts that had been priced into the fed funds futures market.

There is a lot of territory to cover still between now and the end of the session, with Fed Chair Powell's press conference on tap at 2:30 p.m. ET. What he says, and how he says it, will likely dictate where things settle today for better or worse.

The 2-yr note yield is down two basis points to 3.49%, and the 10-yr note yield is down three basis points to 4.00%.