March 27, 2024

US tech stocks sink after FOMC minutes

Greetings from day four of managed isolation in New Zealand, and no, I’m not a tennis player. All the chatter overnight was about the implosion on tech stocks in New York after seemingly hawkish FOMC minutes from the December meeting. The US dollar reversed intraday losses and US yields firmed once again, but it was tech stocks and bitcoin that fared worst, the Nasdaq falling by 3.34%, and bitcoin slumping by 5.50%.

The minutes revealed that committee members felt inflation risks were more persistent and to the upside, and there was general agreement that the taper should be accelerated with three tentative rate hikes pencilled in. So far that’s exactly what we were told in the post-FOMC meeting by Chairman Powell. Nothing to see here. The only surprise, if you can call it that, is that some members felt that the Fed should commence running down its balance sheet soon after its first hike. I.e., selling some of those USD 8.50 trillion of bonds, etc. Nothing else was said in the minutes and the meeting moved on.

Normally the FOMC minutes is a big yawn-ster, and not market-moving. The fact that it spurred a massive rush for the exit in the most QE-driven pimp-up-my-asset classes at a casual mention of possibly thinking about reducing the balance sheet earlier says one thing really. That thing is that markets right through the holiday period had been blissfully pricing in omicron as omi-gone. Given it…

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