| Good morning. Dovish Powell fuels equity rally. Yen surges to strongest since March. US considers unilateral restrictions on China's chip access. Here's what's moving markets. — Isabelle Lee Dovish comments from Federal Reserve Chair Jerome Powell extended a rally in stocks that started with a surge in key tech companies, pushing the Nasdaq 100 up 3%. Nvidia surged 13% on a bullish analyst call, adding a record $329 billion in value. In late trading, Meta shares gained on a sales beat. Qualcomm, the world's biggest seller of smartphone processors, gave a strong revenue forecast. Treasury yields were down across the curve and the dollar slipped against all its developed-market peers. Traders continued pricing in a minimum of two rate cuts this year, with the first still anticipated in September. Powell said a rate cut "could be" on the table then. His comments came after the Fed decided to keep rates unchanged at its latest policy meeting. The yen surged to the strongest since March versus the dollar after the Bank of Japan raised interest rates and announced plans to cut bond purchases, reigniting an aggressive rally. The currency climbed as much as 2.1% against the greenback, punching through the key 150-per-dollar level. Japanese government bonds fell in the wake of the BOJ announcement, with the yield on two-year notes climbing to the highest in 15 years. The yen has benefited in recent days from a rapid unwind in carry trades, a strategy that uses low-yielding currencies like the yen to fund purchases in higher yielders such as the Mexican peso. The US is considering unilateral restrictions on China's access to AI memory chips and equipment capable of making those semiconductors as soon as next month. The measure is designed to keep Micron and South Korea's leading memory chipmakers SK Hynix and Samsung from supplying Chinese firms with so-called high-bandwidth memory, or HBM, chips. The three firms dominate the global HBM market. The Biden administration is working on restrictions aimed at keeping vital technology out of the hands of Chinese manufacturers. Separately, firms with ties to China and foreign adversaries would be barred from getting a tax credit meant to bolster domestic energy manufacturing under new legislation. Chinese electric carmaker BYD is looking to enter the Canadian market just as Prime Minister Justin Trudeau's government works to clamp down on imports of vehicles from the Asian powerhouse. Lobbyists for the firm, which sells its electric vehicles for less than $10,000, filed notice with the federal registry that they plan to approach officials and lawmakers to advocate for BYD's anticipated entry. Canada is set to wrap on Thursday a 30-day consultation on measures to restrict Chinese EV imports — including higher tariffs to align with the US and the European Union. It's also mulling blocking Chinese investment in new Canadian factories. Thursday brings South Korean export data. Gains likely accelerated in July, but the figures will have been boosted by an increase in working days due to a calendar distortion. Traders will also see China's Caixin manufacturing PMI, which probably fell but stayed in expansionary territory. Indonesian CPI inflation is also on tap, and likely remained stable. Bloomberg Economics expects the print to be broadly unchanged at 2.37% year on year, compared with a 2.51% gain in June. Elsewhere, the Bank of England will issue its rate decision. Earnings in the US continue, with Amazon and Apple set to report. Here's what caught our eye over the past 24 hours: - Strikes on Israel's enemies in Tehran, Beirut raise tensions
- Maduro risks regional rift in standoff at Argentine embassy
- Colombia cuts interest rate to 10.75% in a split decision
- BlackRock leads big firms racing to put private assets into ETFs
- Ackman's Pershing Square USA pulls IPO after slashing size goal
- Tesla 'full self-driving' enabled in deadly motorcycle crash
- Business school ROI calculator: Will an MBA pay off for you?
Heading into Wednesday's Fed meeting, financial markets were positioned for the central bank to signal a rate cut is coming in September. While the statement and Powell's press conference certainly represented a dovish shift, they fell short of promising or even of overtly guiding (via nudge nudge, wink wink language) that an easing is a foregone conclusion. The Fed statement and Powell both noted there's been further progress on inflation and that dual-mandate risks are in better balance. Powell unsurprisingly did not pre-commit to a September rate cut. Arguably the statement did not even suggest that it is a base case, given that it noted the committee needs to see further progress on inflation. That said, Powell indicated that it is certainly a realistic possibility. Moreover, there is still plenty of time to communicate that incoming data has provided the requisite confidence, with the Jackson Hole conference in three-and-a-bit weeks standing out as an obvious opportunity. Reading between the lines, it feels like the Fed is worrying about screwing up. And let's face it, it is treading a relatively fine line between avoiding a recession on the one hand or stoking a resurgence in demand and inflation on the other. That's going to continue to inform the guidance moving forward; chances are, some hawkish (and dovish!) swings are lurking somewhere in the not-so-distant future. Cameron Crise is a macro strategist who writes for Bloomberg's Markets Live blog. | 
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