ADC12 Market Slumps as Prices Drop and Demand Weakens Ahead of Labour Day

US March durable goods orders data showed a 0.8% MoM increase, exceeding market expectations of 0.5%. Further, core capital goods orders excluding aircraft and defense equipment surged 3.3% MoM, far exceeding market expectations of 0.5% and marking the largest single-month gain since mid-2020.

Fed Chairman Powell noted that the current interest rate level was in a good place. He also mentioned that the number of officials supporting a shift toward a neutral monetary policy stance had increased, and even suggested that changes to the current easing bias might be considered as early as the next meeting. He emphasized that no one was calling for a rate hike, and those who disagreed with the easing stance were not leaning toward raising rates either. Powell also indicated that if there were a need to raise or cut interest rates in the future, the US Fed would signal in advance and take appropriate action. Additionally, it was necessary to monitor energy and tariff issues before considering an interest rate cut.

The US Fed announced its April interest rate decision, voting 8:4—a relatively rare outcome—to maintain the federal funds rate target range at 3.50%–3.75%, marking the third consecutive hold. Among the dissenters, Miran voted against the decision, advocating for a 0.25 percentage point interest rate cut; Hammack, Kashkari, and Logan also cast dissenting votes, supporting the current federal funds rate target range but opposing the inclusion of an easing bias in the statement. This meeting saw the most dissenting votes since October 1992. The statement retained potentially dovish language, indicating that the Fed would carefully assess the latest information when considering the extent and timing of "further" interest rate adjustments.