■ Fed rate announcement proves pivotal for weekly trading session

■ Markets price in ambiguous Fed statement

■ Friday weak u.s. wages data helps push equity, lowers yields

■ U.S. equity markets conclude with nice weekly gains, Eurozone less so

■ Gold stabilizes after yield drop

Last week's trading session was split pretty much in the middle, as a result of Wednesday's Fed's monetary policy statement. Buildup for the announcement included accumulating optimism in the stock markets. Namely the S&P 500 (SPY) recorded a respectable 1.24% gain on Tuesday, followed by a tad less than 0.5%, during the start of Wednesday's session, ahead of the Fed's announcement.

The announcement unsurprisingly cleared speculations from the markets. Since this time it wasn't followed by a press conference, the Fed's leaving rates unchanged was somewhat expected. Hints on the future, however, was more complex. The Fed's statement did say that the labor market “continued to improve with solid job gains and declining unemployment“. It also re-iterated its stance by which risks to the outlook for economic activity and the labor market are “nearly balanced.” On the other hand, supporting a dovish stance, the FOMC committee also said it anticipates a rate hike will be appropriate “when it has seen some further improvement in the labor market.”

While the U.S. sovereign yield curve did display some volatility around the announcement. Nonetheless, minutes following it saw U.S. interest rate markets at roughly where they were a short while before. Equity did see a slight upward nudge, relieved by the fact that the statement wasn't more hawkish. The modest gains that U.S. markets saw after the announcement, however, dissolved at the start of Thursday's session.

Going back to the data

When central bankers speak in an ambiguous manner, it's often time for markets to seek their insight at the data. On Friday, the U.S. Employment Cost Index outlined a rather weak 0.2% Quarter over Quarter gain in Q2, significantly below analyst expectations for a 0.7% gain. With the Fed's language pivotal as it is, the negative data was soon interpreted through the ol' ‘good news is bad news' paradigm, seeing U.S. equity markets open in the green, fueled by a drop of bond yields.