Markets are reacting positively to the Fed’s decision, with indices like the DAX and Eurostoxx showing solid gains. We see this as a short-term relief rally, as the central bank avoided delivering a hawkish surprise yesterday. This temporary clarity shifts the market’s entire focus onto the next round of major US economic data.<\/p>\n
With the main event risk now passed, we’ve seen implied volatility contract, with the VIX dropping below 15 from its pre-meeting highs. This presents an opportunity for traders to sell premium, such as through short-dated credit spreads on indices like the S&P 500. However, this low volatility could be a trap ahead of the crucial inflation and jobs data due in early October.<\/p>\n
The market’s dovish pricing for the rest of the year will be tested, especially since the last core CPI reading remained sticky at 3.1%. We also saw a resilient labor market in the last report, with a solid 190,000 jobs added in August, giving the Fed little reason to rush into rate cuts. Traders should consider buying cheap, out-of-the-money puts on indices before these reports as a hedge against any data that comes in hotter than expected.<\/p>\n
We need to remember the market patterns from 2023, where post-Fed rallies were often short-lived and quickly reversed by strong economic numbers. Those periods taught us that initial optimism can fade once the data forces a re-evaluation of the Fed’s path. This suggests that while we can ride the current upward momentum, maintaining protective positions is a sensible strategy for the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" European stocks rose after the Fed’s decision; investors now eye upcoming US data to gauge direction.<\/p>\n","protected":false},"author":62,"featured_media":16985,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-31010","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=31010"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31010\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16985"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=31010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=31010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=31010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}