Daily summary: Fed holds rates, oil drops after Trump’s comments 📣📃

U.S. indices ended the day in negative territory following the press conference by Fed Chair Jerome Powell, who struck a slightly more hawkish tone.

The Federal Reserve did not surprise investors and decided to keep interest rates unchanged at 4.25%–4.5%.

The Fed remains slightly more hawkish than expected. Sentiment deteriorated due to concerns about trade policy, raising questions about its impact on consumer spending.

More importantly, the Fed revised its economic projections, pointing to slower GDP growth, slightly higher unemployment, and slightly higher inflation than in the March forecasts.

The dot plot appears hawkish, as although the median projection still indicates two rate cuts in 2025, there is a hawkish shift in 2026/2027 (one cut removed compared to March’s forecast).

For 2025, seven Fed officials now see no rate cuts (compared to four in March), and two forecast one cut (down from four previously).

Powell stated that the impact of the trade war should be visible by the end of summer, and that the Fed will make a wiser decision if it waits a few more months for new data and possible updates regarding tariffs.

The statement no longer includes warnings about higher inflation or slower growth, which may suggest a potential rate cut in September. Everything will now depend on the data over the next two months.

In Europe, stock indices closed the cash session lower. The German DAX fell 0.39%, while the French CAC40 dropped 0.36%.

Bank of Canada Governor Tiff Macklem stated in a speech that a trade agreement between Canada and the United States could help ease inflationary pressure and potentially reverse existing tariffs.

Following a recent slowdown in wage growth in the Eurozone, inflation data reflected emerging deflationary trends. Month-over-month prices remained unchanged, while annual inflation dropped below the ECB’s 2% target.

The U.S. housing starts report for May came in weaker than expected. The number of housing starts was the lowest since 2020, and permits were also below forecasts. Despite lower mortgage rates, demand has not improved, and builder sentiment is near crisis-era lows.

Jobless claims remained close to expectations at 245,000 (forecast: 245,000 vs. 248,000 previously).

The EIA report showed a record drop in crude oil inventories of -11.473 million barrels (forecast: -2.5 million, prior: -3.644 million).

However, the market largely ignored the inventory data and turned its focus to comments by Donald Trump at the same time. The president announced that Iranian officials approached the U.S. about talks regarding the conflict with Israel. Investors interpreted this as a potential willingness to negotiate peace. As a result, crude oil prices dropped about 2% immediately after Trump’s statement.

The U.S. Senate yesterday passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act by a 68–30 vote, thereby approving the first nationwide regulatory framework for dollar-backed stablecoins. The bill now heads to the House of Representatives for the next legislative stage.

Uncertainty in global markets and a flight to safer assets pushed Bitcoin below $103,600.