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The FOMC is expected to keep the target range for the federal funds rate unchanged at 3.50%–3.75%. The consensus expects up to two dissenters to vote in favor of a rate hike at this meeting, likely Fed's Logan and/or Fed's Hammack. We won't get the Summary of Economic Projections (SEP) at this meeting. 

Forward guidance is likely to remain limited, with Fed Chair Warsh expected to refrain from providing any major policy signals while stressing data dependence and the Fed's commitment to price stability. 

STATEMENT AND PRESS CONFERENCE

The June's FOMC statement surprised everyone with how short and shallow it was, but it should be the baseline for future statements. The focus will be mainly on the first line where it shows the vote split.

The…

US Stocks Mixed Ahead of Key Fed Call – Dow up 1%

US equity markets delivered a mixed performance overnight as investors remained cautious ahead of today’s highly anticipated Federal Reserve interest rate decision and another busy round of corporate earnings. While weakness in semiconductor stocks weighed on the technology sector for a second consecutive session, gains across financials, industrials, and defensive sectors helped the broader market remain resilient.

The Dow Jones rose 1.03% to close at 52,747, outperforming its peers, while the S&P 500 edged 0.21% higher to 7,428. The technology-heavy Nasdaq slipped 0.22% to 24,876 as investors continued to take profits in chipmakers ahead of the Fed announcement.

Bond markets…

Over the past five days, the Nasdaq has fallen more than 3%,  and while the case for a further decline may look strong at first glance, there are still a few “buts.” 

Starting with geopolitics, although tensions in the Middle East have flared up again,pushing oil prices higher and raising concerns about a more aggressive Federal Reserve stance, the White House has little interest in letting the conflict drag on, as it could hurt the Republicans’ chances in the upcoming midterm elections.

According to aPOLITICO poll, the share of MAGA supporters who believe the war is worth the economic costs has already fallen from 50% in May to just over one-third, while nearly one in five believe the U.S. should end its involvement in the war regardless…

When markets are surging with euphoria, there's never any problem. But when exposed to volatility on the opposite end that causes sharp losses, suddenly it's an issue. Boohoo.

In the run from April to the peak in June, South Korea's benchmark KOSPI index gained by a whopping 85%. Since then, the AI trade went bust and that has brought about heavy declines in the past five weeks. The negative streak is extending to this week too with the KOSPI at one point even being down near 13% earlier today after the over 10% drop yesterday. But towards the close, we saw losses pared somewhat to salvage a drop of just 6% by the time the closing bell struck.

So after the 85% run higher in about 10 weeks with no complaints, we're seeing a 40% drop now in…

• Australian June CPI 3.8% y/y vs +4.0% expected
• South Korea has just experienced something worse than the dot-com bust
• Oil jumps on a report that Iran launched ballistic missiles towards a US base in Jordan
• US weekly private oil inventories +3.3m vs -1.4m expected

Markets:

• South Korean Kospi down 8.1%
• CHF leads, USD lags
• Nikkei 225 down 4%
• S&P 500 futures down 0.1%
• WTI crude up $3.10 to $82.36
• US 10-year yields up 1.2 bps to 4.62%

It was another crazy day in South Korea. This time the Kospi opened higher only to crumble, currently down more than 8% on a drop in SK Hynix shares following earnings. The commentary wasn't bad and the company talked about demand extending through 2027 but revenues missed and in this market, only perfect is good enough. I…

It was always going to be a long shot but as mentioned yesterday, the details of the proposal are not going to be up to Iran's liking whatsoever. And we're already getting a quick response as a senior Iran official shoots it down. The headlines are via Reuters:

• Iran has ruled out Oman's proposal for regional joint management of Strait of Hormuz
• The proposal has no chance of success
• Only Iran and Oman can decide on arrangements for the strait based on respective shares
• Iran rejects any role for other countries to be involved
• The entire inbound route and part of the outbound route through the strait must be under Iranian control
• Oman is a valuable neighbour but 50-50 joint control arrangement will not work

In case you missed it, this was the…

• June import prices -0.7% vs -0.7% m/m expected
• Prior +0.7%

This is in contrast to the May estimate but it matches with the decline in energy prices in the run up to the ceasefire deal between the US and Iran at the end of June. Since then, a lot has changed of course and energy prices have shot back higher so I wouldn't extrapolate much from the report here.

The annual estimate shows that import prices in Germany were still up by 6.1% compared to June last year. So, it still speaks to a material jump in terms of overall prices relative to a year ago. And that is mostly thanks to the conflict in the Middle East disrupting supply chains and leading to higher prices in energy and raw materials.

Looking at the details for June though, prices for…

There isn't all too much on the expiries board for the day ahead, with the full list seen below.

The only notable one perhaps is for EUR/USD at the 1.1415 level. Even then, the expiries don't tie to any technical significance so I would not attach too much impact from it on price action. The dollar remains in a push and pull mood as markets continue to digest US-Iran developments as well as the continued selloff in tech shares.

Coming up later today, there will be the Fed meeting to add to the mix. As such, expect broader markets to hold a more pensive mood until we get to that.

That being said, risk sentiment remains on edge and is staying on the defensive after another bloodbath in Asia today. Stocks are under pressure, tech shares…

It's looking really rough out there with Asian stocks once again being taken to the cleaners. All eyes are on South Korea as tech shares continue to be battered amid the AI boom and bust cycle. At the lows just now, the KOSPI sank by over 12% and leads the rout in recent weeks to effectively wipe out the gains from April to June.

From earlier: South Korea has just experienced something worse than the dot-com bust

The amount of leverage involved will serve as good lessons for the future and it's going to be quite a big wake up call for the new age of degen traders thinking that the stock market only moves in one direction. There will be many stories to come out from the great selloff here but for long-term investors, there will be good…

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US stocks continue to see the rotation at of AI/Chips and into industrials.

• Dow industrial average is up 297 points or 0.55%.
• S&P index is down -16 points or -0.22%
• NASDAQ is down -254.2 or -1.02%. Technically, the NASDAQ index is trading below its 100 day moving average at 24752. That's the 1st time since April 13. Bearish.  

SanDisk remains under heavy selling pressure, with the stock now down roughly 50% from its June 22 record high. Yesterday's close left the shares hovering just above the 100-day moving average at $1,314. Today, that support gave way as the stock plunged another $140, or 11.01%, as investors headed for the exits. The next major technical target sits much lower at the rising 200-day moving average, currently at $827.61.…