- Miran’s comments reinforce the dovish tone in equities
- NVIDIA strikes again, driving the tech sector higher
By Daniela Sabin Hathorn, senior market analyst at Capital.com
US equities continue to move higher after Stephen Miran’s comments reaffirmed the dovish tone. He used Monday’s speech to argue that policy is about 200 bps too tight and that the “appropriate” fed funds rate is in the mid-2s—well below the current 4.00–4.25% range. His case hinges on a falling neutral rate driven by non-monetary forces—tighter border policy reducing population growth, tariff revenues lifting national saving, and regulation shifts—so leaving rates where they are risks unnecessary job losses. Essentially, he wants bigger, faster cuts than the FOMC median. And this is music to the ears of those that have been causing markets to be heavily skewed towards ultra dovish policy. However, it leaves risks tipped towards disappointment if the path of rates doesn’t live up to the expectations. The next hurdle is going to be the PCE data on Friday, which could leave many scarred if it prints a hotter reading than expected.
Nasdaq 100 daily chart:
Past performance is not a reliable indicator of future results.
Meanwhile, the tech heavy Nasdaq 100 has received another boost from NVIDIA as the company has announced a new strategic alliance, this time with OpenAI. In effect, Nvidia will become both the supplier and an enabler of its biggest customer, creating a circular stream of revenues within the supply chain. This also means that NVIDIA will be able to control demand for its chips but also have a say on how the development of AI platforms evolves. Traders read the deal as cementing multi-year demand for Nvidia’s products, so the stock rallied and pulled AI peers and suppliers higher, pushing the index to new highs.
