July 30, 2026

The Federal Reserve kept the benchmark interest rate unchanged in the 3.50%-3.75% range

International

The Federal Reserve (Fed) announced yesterday its decision to keep the benchmark interest rate unchanged in the 3.50%-3.75% range for the fifth consecutive meeting. The decision was adopted by a vote of 9 to 3, with three dissenting members advocating for a 25-basis-point increase. In the subsequent press conference, Kevin Warsh avoided characterizing the move as a pause, describing it instead as the result of a rigorous review of the economic situation, clarifying that it is the beginning, not the end, of a process. He also reiterated that the Fed does not have an implied inflation target above 2% and that the more than five years of inflation exceeding that target cannot be corrected in a few weeks. Finally, he reiterated his intention not to provide advance signals about the direction of monetary policy and considered it positive that Treasury bond yields respond to economic data rather than signals from the Fed, referring to the Treasury rate movements between the last two meetings.

In this context, the US Treasury yield curve steepened at yesterday's close, with a decline in the short end and increases in the medium and long ends. Specifically, the 1-year bond moved from 4.07% to 4.02%, while the 3-year bond fell from 4.31% to 4.33%. Finally, the 10-year bond saw a change from 4.61% to 4.70%.

Meanwhile, the main US stock indices closed lower across the board on Wednesday. The S&P 500 fell 1.5%, while the Nasdaq dropped 1.7%. The Dow Jones suffered the largest decline, falling 2.2%. Year-to-date, the indexes have accumulated gains of 6.9%, 5.2%, and 7.3%, respectively.

Finally, Microsoft and Meta Platforms released their earnings reports after yesterday's close, eliciting contrasting reactions. Microsoft exceeded analysts' expectations for both revenue and earnings per share (EPS), with faster-than-expected growth in Azure, its cloud services unit, and maintained its capital investment plan for 2026; its stock rose 8.9% in after-hours trading. Meta Platforms, on the other hand, slightly exceeded revenue estimates but fell short of expectations in EPS, with a contraction in operating margin and an increase at the lower end of its capital expenditure range, causing the stock to decline 7.0%. As for today's agenda, Mastercard reported before the market opened and beat analysts' expectations for both revenue and EPS, while Apple and Amazon will release their results after the market closes.

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