The main event of the week was the Federal Open Market Committee meeting, with the Fed deciding to leave rates unchanged at 5.25%-5.5%, as widely expected by the market.
The median preference for the projected fed funds rate at the end of 2023 held steady after Wednesday’s Fed decision, aligning with the previous June forecast at 5.6%. This suggests the Fed is leaning toward one additional rate increase in either one of the two remaining meetings this year. FOMC members have scaled back their projected rate cuts for next year, now indicating a total of 50 basis points of cuts for 2024, a more hawkish shift from the previous June projection of a full percentage point reduction.
Powell delivers balanced remarks
During his news conference, Fed Chair Jerome Powell cautiously balanced his tone. He warned the path to the 2% inflation target has a long way to go, possibly keeping interest rates elevated for longer. At the same time, Powell indicated the Fed’s readiness to proceed carefully based on forthcoming economic data without a firm commitment to additional rate hikes.
Treasury yields hit 17-year highs
Yields for two-year Treasury notes reached 5.2% on Thursday, marking their highest point since July 2006. Simultaneously, the 10-year yield surpassed 4.4%, reaching levels last seen in November 2007.
Cisco set to acquire Splunk
Cisco announced an agreement to acquire cybersecurity company Splunk in a deal valued at approximately $28 billion, or $157 per share. The purchase price implies a premium of 31.3% on Splunk’s Sept. 20 closing of $119.59. Splunk’s stock surged 21% on the news.
