Warned about inflation, markets are simply yawning
Federal Reserve Chairman Jerome Powell delivered a clear and concise message to the markets on Wednesday shortly before 3 p.m. (Eastern Time): some inflation is to be expected soon.
Some stocks experienced a brief sell-off, more or less. But ultimately, the market shrugged it off. At 3:30 p.m. (EST), the Dow and the S&P 500 were trading in a volatile and sideways manner. The latter, a leading index, seems to enjoy hovering just a few points below 6,000. It wouldn't rise much higher. By the close on Wednesday, the S&P 500 recorded a slight loss of 0.03%.
Bitcoin, which is struggling to determine whether it is a risk asset or a hedge against inflation, remained stable on Wednesday around $104,000, down 4% from a week ago. BTC has dropped 7% from its all-time high of $111,814, reached on May 22, according to CoinGecko.
"Everyone I know is forecasting a significant increase in inflation in the coming months due to tariffs, because someone has to pay for them," Powell said during a press conference yesterday following the conclusion of the Fed's June meeting, where interest rates were left unchanged.
Meanwhile, the conflict between Israel and Iran has created an additional layer of clouds over a dense fog related to the trade war. As for U.S. intervention, President Trump had still not made a decision as of last night.
Despite the magic potion that could lead to slower growth and higher prices—particularly at gas stations if the war in the Middle East continues—the Fed still holds expectations for the possibility of two rate cuts this year.
