ASX 200 Live Today - Thursday, 17th September

Welcome to our live ASX coverage for Thursday, September 17. Expect a high volume of posts pre-market and more periodic updates throughout the day. We'll be wrapping the blog up around 2:00 pm AEST. Let us know how we can make it even better.

BOJ set to lift rates to a 31-year high on Friday

[9:14 am] The Bank of Japan is expected to hike for the first time in three months, joining the Fed and ECB in leaning against oil-driven inflation.

• The policy rate is set to rise to 1.25% from 1%, a 31-year high, with board member Toichiro Asada seen as a possible dissenter after opposing the June hike

• A move to 1.25% would bring policy inside the BOJ's estimated 1.1% to 2.5% nominal neutral range, raising questions on how much further it can go, with hawkish board member Naoki Tamura putting neutral around 2%

• Reuters-polled analysts expect 1.5% by end-March next year and 1.75% in the second quarter of 2027, with most seeing the terminal rate at 1.75% or higher

• Ueda said earlier this month that with underlying inflation "quite close" to the 2% target, the BOJ must pay particular attention to inflationary risks, having warned in July of an overshoot from fuel costs, a weak yen and strong AI demand

Source: Reuters

Trump demands 1% rates hours after the Fed hikes

[9:12 am] The President resumed his pressure campaign on the central bank after Wednesday's quarter-point increase, without naming Warsh directly.

• Trump posted on Truth Social that US rates "should be 1%, or less, because we are the Best Credit in the World", adding "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!"

• The Fed lifted its benchmark a quarter point to a 3.75%-4% target range in a unanimous 12-member FOMC vote, with the statement noting inflation remains elevated and updated projections showing a strong majority expect another increase

• Trump had threatened less than two weeks ago to cut off trade with countries running surpluses with the US if the Fed did not cut, a group covering most of its major trading partners

• Trump and his aides have so far avoided attacking Warsh personally, despite the chairman being his own pick to replace Jerome Powell

• White House spokesman Kush Desai said Trump "absolutely" still believes in Fed independence, while defending his right to speak out

History says the first hike of a cycle stings before it pays

[9:11 am] With the Fed lifting rates 25bp on Wednesday, strategists are pointing investors to what has happened after previous first hikes.

• The Kobeissi Letter found the S&P 500 has fallen an average of 4.0% over the six weeks following the first hike of a cycle across seven episodes since 1988, before recovering all of those losses over the next five to six weeks on average

• Returns turn positive further out, with the index up an average 4% six months after a first hike and 9% after 12 months, positive in every episode bar 2022

• Goldman Sachs research points the same way, showing an average 2% decline in the months immediately after a hike followed by an average 9% gain over the following year

• Cross-asset moves were mixed, with the 10-year Treasury yield up to 5.02%, gold off 0.67% to $4,263.91 and Brent crude down 2.69% to $105.83 a barrel after Saudi Arabia offered extra cargoes via Oman

S&P 500 tanks on the Fed Press Conference

[8:46 am] The S&P 500 was trading around 0.30% higher heading into the press conference. By 5:25 am AEST, it was down as much as 1.0%, but bounced strongly in the last 30 minutes of trade.

S&P 500 intraday chart (Source: TradingView)

Bond market signals growing faith in Warsh after first Fed hike since 2023

[8:44 am] The Fed lifted rates on Wednesday and flagged further tightening, prompting traders to reprice the path higher.

• Traders are now pricing three additional Fed increases by the middle of next year, one more than before the decision, with swaps indicating the first could land as soon as next month

• Two-year Treasury yields climbed to 4.74% from 4.6% before the announcement, the highest since 2024, while long-term inflation expectations tumbled

• Longer-dated Treasuries trailed the move, flattening the gap between two- and 30-year yields to the tightest since March 2025 on a closing basis

• Warsh said recent inflation data "do not tell me that underlying trends have meaningfully improved", with the Fed framing the hike as support for a faster return to its 2% target

• 10- and 30-year yields hit their highest since 2007 ahead of the decision, driven by the energy supply shock since February and heavy corporate borrowing to fund AI spending

Source: Bloomberg

Fed hikes for the first time since 2023 and signals more to come

[8:43 am] The FOMC lifted rates a quarter point and its new projections point to further tightening, sending US stocks and bonds lower.

• The federal funds target was raised 25bp to 3.75%-4% on a unanimous 12-0 vote, the first increase since July 2023 and a shift from July, when officials held steady with three dissents in favour of a hike

• The dot plot turned hawkish, with 16 of 18 officials seeing at least one more quarter-point increase this year, up from six in June, and the median end-2026 outlook lifting to 4.1% from 3.8%

• Forecasts were revised with 2026 headline inflation at 3.7% from 3.6%, core at 3.4% from 3.3%, GDP at 2.3% from 2.2% and unemployment at 4.1% from 4.3%, while the return to 2% inflation was pushed out to 2029

• Warsh said the Fed "removed a dose of accommodation" and that this summer's readings "do not tell me that underlying trends have meaningfully improved", with Morgan Stanley's Michael Gapen reading the accommodation line as hawkish

• Swaps now imply three further increases by the middle of next year, one more than before the meeting, running ahead of even the most hawkish FOMC dots

Good morning!

[8:24 am] ASX 200 futures are down 63 pts (-0.72%). Here's what happened overnight:

• The Fed hiked for the first time since 2023 and in-line with market expectations

• Markets were trading slightly higher heading into the Fed decision but tanked on Fed Chair Kevin Warsh's press conference

  • S&P 500 (-0.45%), Nasdaq (-0.01%), Dow (-1.21%) and Russell 2000 (-0.40%)

• The dot plot median showed two 25 bp hikes in 2026 and nine in 2027, vs. the June forecast of just one hike in 2026 and a cut in 2027, but dovish compared to market pricing for four straight hikes by June 2027

• Warsh refused to guide on what comes next, leaving the two-year yield at its highest since 2024 and the US dollar at a six-week high

• Oil retreated below US$103 on a surprise industry inventory build and signs Saudi Arabia's East-West pipeline could restart within days