The US Federal Reserve held interest rates steady for the third time running, keeping its benchmark federal funds rate at 4.25%-4.50% as officials flagged rising risks of higher inflation and unemployment. “Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen,” the Fed’s Federal Open Market Committee (FOMC) wrote in its statement.

No rush to act amid murky outlook: Fed Chair Jerome Powell struck a cautious tone in his post-meeting press conference, saying the Fed is “well positioned to respond in a timely way to potential economic developments.” Powell added, “we think we’re in the right place to wait and see how things evolve. We don’t feel like we need to be in a hurry.” On tariffs, he admitted that trade policy remains a wildcard. “I don’t think we can say which way this will shake out.” He warned that if Trump’s “large increases in tariffs” are sustained, they could “generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.”

Jobs data strong, but inflation still hot: The labor market remained resilient in April, with employers adding 177k jobs and the unemployment rate holding at 4.2%. Meanwhile, the Fed’s preferred inflation gauge — the PCE index — rose 2.3% y-o-y in March, surpassing market expectations.

Markets reax: Stocks rose following the Fed’s announcement — the S&P 500 rose 0.4%, the Nasdaq was up 0.4%, and the Dow Jones rose 0.7%. Meanwhile, the yield on the 10-year US Treasury note fell 3 bps to 4.27%.

Policy on pause, for now: “The Fed remains in a holding pattern as it waits for uncertainty to clear,” said Goldman Sachs Asset Management’s Ashish Shah. “The onus is on the labor market to weaken sufficiently to bring a resumption of its easing cycle.”

The story got a lot of ink on international press: Bloomberg | Reuters | FT | CNBC | The Washington Post | New York Times.

MARKETS THIS MORNING-

Asian markets are in the green this morning. Japan’s Nikkei is up 0.4%, the Shanghai Composite is looking at gains of 0.3%, the Hand Seng is up 0.4%, and Korea’s Kospi is up a modest 0.1%.

EGX30

31,840

-1.4% (YTD: +7.1%)

USD (CBE)

Buy 50.57

Sell 50.71

USD (CIB)

Buy 50.59

Sell 50.69

Interest rates (CBE)

25.00% deposit

26.00% lending

Tadawul

11,399

-0.3% (YTD: -5.3%)

ADX

9,611

-0.1% (YTD: +2.0%)

DFM

5,338

-0.3% (YTD: +3.5%)

S&P 500

5,631

+0.4% (YTD: -4.3%)

FTSE 100

8,559

-0.4% (YTD: +4.7%)

Euro Stoxx 50

5,230

-0.6% (YTD: +6.8%)

Brent crude

USD 60.99

-1.9%

Natural gas (Nymex)

USD 3.62

+4.7%

Gold

USD 3,374

-1.4%

BTC

USD 96,757

+2.2% (YTD: +3.3%)

S&P Egypt Sovereign Bond Index

865.9

+0.2% (YTD: +11.4%)

S&P MENA Bond & Sukuk

143.3

-0.3% (YTD: +2.4%)

VIX (Volatility Index)

23.55

-4.9% (YTD: +35.7%)

THE CLOSING BELL-

The EGX30 fell 1.4% at yesterday’s close on turnover of EGP 6 bn (34.3% above the 90-day average). Foreign investors were net sellers. The index is up 7.1% YTD.

In the green: Beltone Holding (+3.6%) and TMG Holding (+1.7%).

In the red: Juhayna (-5.8%), Fawry (-4.5%) and Orascom Developments (-3.8%).

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