Fed Voters Voice Concerns for Early Rate Cuts while Nvidia Earnings Beat Expectations

Rates rise on hawkish FOMC minutes. The Fed’s patience toward commencing rate cuts was the theme of the session for rates. Fed President Bowman said that the timeline for rate cuts is “certainly not now,” while FOMC minutes from January’s policy meeting were generally hawkish. Combined with weak demand at today’s 20y UST auction, swap rates/UST yields rose 3-5bps on the session. Elsewhere, equities were little changed during market hours as investors awaited Nvidia’s earnings call. Nvidia’s results were strong, their stock currently up over 7% in after-hours trading while Nasdaq 100 futures climbed 0.9%.

FOMC minutes communicate Fed officials’ concerns about cutting rates too quickly. January FOMC minutes released today delved into FOMC members’ thoughts on risks associated with a pivot to easing in 2024. Though headline and core inflation improvements were noted, some participants “judged that some of the recent improvement in inflation reflected idiosyncratic movements in a few series,” calling into question the stickiness of the improvements. On the cutting timeline, the minutes stated that most participants, “noted the risks of moving too quickly to ease the stance of policy,” and, “highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained.”

Nvidia beats Q4 estimates and projects better than expected revenue in Q1 2024. The head of the AI-boom continued to impress in its after-hours earnings release today, as Nvidia’s performance in Q4 of last year largely beat estimates. Revenue was $22.1B vs. the $20.6B forecast, while EPS was $5.16 vs. the $4.64 estimate. Their total revenue rose ~265% from a year ago, fueled by “surging {demand} worldwide across companies, industries and nations,” according to founder and CEO Jensen Huang. Data center revenue of $18.4B led the charge, a 409% increase from a year ago when revenue was only $3.6B. Nvidia’s market cap has skyrocketed to $1.67T from $352B at the start of 2023, a near 5x increase for the powerhouse that led the SPX in gains last year.