Tag Archives: Federal Reserve

Powell’s Warnings Sink Stocks Boost Gold and Bonds

Powell’s Warnings Sink Stocks, Boost Gold and Bonds:
Federal Reserve Chairman Jerome Powell’s warnings that trade tensions could undermine the
central bank’s employment and price stability goals triggered a fresh wave of volatility on Wall Street Thursday.
U.S. stock indices saw another sharp drop, while safe-haven assets like Treasury bonds and gold surged.

 

Contents

Powell Disappoints Expectations

U.S. Indices Slide

Labor Market
Additional Comments

Escalating Volatility
U.S. Retail Sales Surge

 

 

 

 

 

Powell Disappoints Expectations for Fed Intervention

After two days of relative calm, pressure returned to the markets following Powell’s signals
of a “wait-and-see” approach regarding the tariffs imposed by President Donald Trump.
This dashed hopes for quick Fed action to reassure investors.
Losses that had started earlier in the session deepened after two major semiconductor
firms reported disappointing results linked to the global trade war.

During his appearance at the Economic Club of Chicago, Powell was asked whether he foresaw
a scenario in which the Fed would step in to calm the markets.
He replied, “No,” adding that there are still many unresolved questions about the impact of Trump’s policies.
He continued: “We don’t know that yet, and until we do, we can’t make well-informed decisions.”

 

U.S. Indices Slide Amid Chip Export Restrictions

The S&P 500 fell by 2.2%, while the tech-heavy Nasdaq 100 dropped by 3%,
following new White House restrictions on Nvidia’s chip exports to China.
Meanwhile, the yield on 10-year U.S. Treasury notes declined by about five basis points to 4.28%.

 

Labor Market “In a Good Place”

Despite recent developments, Powell emphasized that the labor market remains.
In a perfect place,” as job supply and demand are easing.
He expressed expectations for these conditions to persist.

Adam Phillips, Managing Director of Investment Strategy at EP Wealth Advisors, noted:
“Many assumed the Fed would prioritize the employment side of the dual mandate if forced to choose,
But Powell clarified that price stability is essential to maintaining a strong labor market.”

He added, “If you expect the Fed to step in and support the market,
you should lower your expectations as long as inflationary pressures remain high.
Don’t expect near-term monetary policy support.”

Michael Bailey, Director of Research at FBB Capital Partners, said:
“Powell threw stocks under the bus.”
adding, “This year has been full of letdowns—from disappointing tariffs to the Fed abandoning investors.
Powell ignored the market at a critical moment, as semiconductor stock shocks weigh on global sentiment.”

 

 

 

 

More Commentary and Pressure on Nvidia and ASML

Earlier, Beth Hammack, head of the Cleveland Federal Reserve,
expressed a similar stance, stating that interest rates should remain steady until the impact of the tariffs becomes clear.
Meanwhile, swap traders maintained their bets that the Fed will cut rates by a whole percentage point by January.

Nvidia’s losses deepened after Powell’s comments, with its stock falling more than 9%.
The company warned of $5.5 billion in costs tied to inventories and obligations related to its H20 chip this quarter.
Concerns grew further after ASML reported weaker-than-expected orders.

On Monday, the U.S. government informed Nvidia that exporting the H20 chip to China requires an “indefinite license.”
Nvidia disclosed that the new rules are based on Washington’s
concerns that “the products in question may be used in a supercomputing device in China, or redirected to one.”

Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank in Singapore,
said: “This move is alarming for two reasons: First, it highlights the erratic nature of Trump’s tariffs,
as prior concessions to Nvidia have been rolled back.
Second, it suggests that U.S.-China tensions are deep and ongoing, despite surface-level calm.”

 

Rising Volatility and Trade Contraction Fears

With volatility increasing, investors flocked to safe-haven assets such as gold,
which reached record levels, and the Swiss franc.
The U.S. dollar weakened amid escalating trade tensions, undermining confidence in the global reserve currency.

Among other pressures on riskier assets, the World Trade Organization revised its outlook for the year,
projecting that global trade will decline by 0.2% in 2025,
nearly three percentage points lower than previous forecasts if no new tariffs are imposed.

Reports also indicated that China is seeking a key figure and more tremendous respect
from the Trump administration before returning to the tariff negotiation table.

Solita Marcelli of UBS Global Wealth Management said:
“While we still expect trade talks to bear fruit eventually,
Brinkmanship between the U.S. and China appears set to continue in the near term.”

 

U.S. Retail Sales Surge

Meanwhile, U.S. retail sales rose 1.4% in March
The most significant increase in two years—as Americans spent heavily,
purchasing everything from cars to electronics in the days before President Trump’s tariff announcement.

 

Powell’s Warnings Sink Stocks, Boost Gold and Bonds

Fed Holds Rates Steady and Updates Outlook

Fed Holds Rates Steady and Updates Outlook: On Wednesday, the U.S. Federal Reserve decided to keep the federal funds rate unchanged at 4.5%,
in line with broad market expectations.
Recent indicators showed that economic activity continues to grow steadily,
with the unemployment rate remaining low in recent months,
reflecting stable labor market conditions.
Inflation remains elevated, and the committee aims to achieve
maximum employment and stable inflation at the 2% target over the long term.

 

Content

Details

Economic Projections

 

Details

Uncertainty surrounding the economic outlook has increased,
and the committee is paying close attention to risks affecting its objectives.
The Fed decided to maintain the target range for the interest rate at 4.5%
while carefully assessing incoming data and evolving forecasts before making any future decisions.
It will also continue reducing its Treasury securities, agency debt, and mortgage-backed securities holdings.
Starting in April, the Fed will slow the pace of balance sheet reduction
by lowering the monthly cap on Treasury redemptions from $25 billion to $5 billion

while keeping the agency debt and mortgage-backed securities cap at $35 billion.

The Federal Reserve remains committed to supporting maximum employment
and bringing inflation back to the 2% target
and will continue to monitor the effects of economic data on its outlook.
The Fed also stands ready to adjust its monetary policy if risks impede achieving its objectives,
considering a wide range of information, including labor market conditions,
inflationary pressures, and financial and international developments.

 

 


Economic Projections

The March economic projections show that the U.S. economy
is expected to grow by 1.7% this year and by 1.8% during 2026 and 2027,
as well as over the long term.
In contrast, the December projections indicated growth of 2.1% in 2025,
around 2.0% in 2026 and 1.9% in 2027.
The unemployment rate is projected to stabilize at 4.4% in 2025,
4.3% in 2026 and 2027 and 4.2% over the long term.
Inflation is expected to settle at 2.7% this year, 2.2% next year,
and 2.0% in 2027 and beyond, compared to previous projections of 2.5% in 2025 and 2.1% the following year.

Analysts expect core inflation to reach 2.8% this year, 2.2% next year, and 2.0% in 2027.

Analysts project interest rates to stabilize at 3.9% in 2025 and 3.4% the following year.

and 3.1% in 2027, settling around 3.0% over the long term,
which aligns with previous forecasts indicating similar levels.

 

Fed Holds Rates Steady and Updates Outlook

Global Rally: Stocks, Gold & Oil Climb on Fed News

Global Rally: Stocks, Gold, & Oil Climb on Fed News: In a notable global rally,
markets rebounded after the Federal Reserve signaled the possibility of an interest rate cut later this year
 while confirming that tariff-related inflation could be temporary.
These developments came as U.S. and Asian equities posted solid gains, bond yields declined,
and gold and oil continued their upward trend amid growing concerns about a global economic slowdown.
 What’s behind this momentum across assets?
And how will markets react to the Fed’s next moves? Read the full report below.

 

Content

Asian Stocks Rise

Powell’s Balanced Tone

Currencies and Bonds React

Fed Policy

Wall Street Responds

Markets Eye Global Central Banks

Corporate Developments

Oil and Gold Extend Gains

Balancing Growth and Inflation

Conclusion

 

 

 

 

Asian Stocks Rise on Wall Street Boost

Asian stocks rallied, driven by Wall Street’s strong performance.
The S&P 500 rose by 1.1%, and the Nasdaq 100 gained 1.3%.
Australian and South Korean markets also posted gains, while U.S. equity futures climbed higher.

In contrast, Chinese equities fell at the start of trading,
dragged down by their U.S.-listed counterparts during Wednesday’s session,
signaling a loss of recent outperformance against U.S. stocks.
 Meanwhile, Japanese markets remained closed due to a public holiday, limiting U.S. Treasury activity in Asia.

 

Powell’s Balanced Tone Calms Markets

As expected, the Federal Reserve held interest rates steady,

but Fed Chair Jerome Powell’s balanced comments reassured markets.
He emphasized that the inflationary impact of Trump’s tariffs could be “temporary” and that recession risks are “not elevated.”

This boosted risk appetite and helped U.S. equities post their strongest Fed-day rally since July,
pushing the S&P 500 back into correction territory after weeks of losses.

 

Currencies and Bonds React

The Australian dollar fell in forex markets after disappointing
labor data showed a loss of more than 52,000 jobs last month.
Meanwhile, according to Bloomberg’s Dollar Spot Index,
the U.S. dollar erased previous gains. U.S. Treasury futures climbed higher in Asia,
with 2-year yields dropping below 4% and the 10-year yield falling to 4.25%.

 

Fed Implements “Indirect Easing”

In what some analysts call indirect easing, the Fed announced
Starting in April, it would reduce the monthly cap on the amount of Treasuries
allowed to roll off its balance sheet from $25 billion to $5 billion.

Jamie Cox of Harris Financial stated:
“This move amounts to indirect rate easing and could pave the way
for the Fed to unwind crisis-era policies by summer if inflation data cooperates.”

 

 

 

 

Wall Street Responds Positively

U.S. indices extended gains, with the S&P 500 up 1.4%, the Nasdaq 100 up 1.6%,
and the Dow Jones rising 1.2%.
Meanwhile, Bloomberg’s Dollar Spot Index climbed 0.3%.

According to several analysts, despite the Fed lowering its 2025 growth forecast and raising inflation estimates,
markets focused on the positive signals related to potential policy easing.

 

Markets Eye Global Central Banks

On the global front, Chinese banks kept their loan prime rate unchanged
for the fifth month while Taiwan prepared for its next monetary policy decision.
The Bank of England is expected to hold rates steady,
while the Swiss National Bank may cut rates by 25 basis points.

 

Corporate Developments

Tencent announced plans to ramp up AI infrastructure investment after posting its fastest revenue growth since 2023.
Meanwhile, Samsung in South Korea pledged to strengthen its position in the high-bandwidth memory chip market following shareholder feedback.

 

Oil and Gold Extend Gains

In commodities, gold surged to new record highs,
driven by expectations of slower growth and higher inflation.
Oil prices continued to rise,
supported by a U.S. government report easing demand concerns.

 

Balancing Growth and Inflation

Despite the rally, analysts warn that markets still face a delicate balancing act between growth risks and persistent inflation.
Allianz’s Charlie Ripley noted that markets welcomed the Fed’s move
to slow balance sheet tightening but could face pressure if inflation remains sticky.

Florian Ielpo of Lombard Odier added that bonds could be the main beneficiary of the Fed’s current stance.
At the same time, equities might come under pressure if high rates persist for an extended period.

 

Conclusion

Overall, the Fed showed greater flexibility in adjusting to economic conditions,
which markets interpreted as a dovish tilt favoring risk assets such as equities.
At the same time, safe havens like bonds and gold attracted increased interest amid cautious optimism.

 

Global Rally: Stocks, Gold & Oil Climb on Fed News

Gold Prices Drop Sharply on Tariff and Rate Concerns

Gold Prices Drop Sharply on Tariff and Rate Concerns: Gold prices declined at their sharpest
pace since December as investors evaluated the impact of new tariffs
announced by U.S. President Donald Trump and Federal Reserve monetary policy developments.
Silver also fell after reaching a three-month high.

 

Contents:

U.S. Retail Sales Decline

Investors Caught Between Gold and the Dollar

Gold Maintains Weekly Gains Despite the Drop

Precious Metals Performance

 

 

 

 

U.S. Retail Sales Decline Strengthens Rate Cut Bets

Data showed that U.S. retail sales in January recorded the steepest drop in two years,
reflecting a sharp pullback in consumer spending after a strong surge at the end of 2024.
This development increased expectations that the Federal Reserve may cut interest rates later this year.

At the same time, speculation has risen that Trump’s newly
threatened tariffs may primarily be a negotiation tool,
especially following his directive to impose retaliatory tariffs on a country-by-country basis.
This process could take significant time to implement.

 

Investors Caught Between Gold and the Dollar

While trade and geopolitical tensions typically drive investors toward gold as a safe haven,
analysts at Morgan Stanley, including Helen Amos,
noted that “some parts of the system appear somewhat strained,”
affecting investor sentiment toward the precious metal.

According to U.S. government data released on Friday,
fund managers reduced their bullish gold bets to a four-week low in the week ending February 11.

 

 

 

 

Gold Maintains Weekly Gains Despite the Drop

Despite the recent decline, gold remains on track for its seventh consecutive weekly gain,
marking its longest winning streak since 2020.
This rally has been partially supported by continued central bank purchases,
particularly from China, and increased gold-backed ETF holdings.

 

Precious Metals Performance

Spot gold dropped 1.6% to $2,882.57 per ounce by 4:58 PM in New York,
reducing its weekly gain to 0.7%.
The Bloomberg Dollar Index declined 0.3%, Silver fell 0.8% after reaching a three-month high earlier,
and Platinum and palladium also recorded slight declines.

 

 

Gold Prices Drop Sharply on Tariff and Rate Concerns

U.S. Inflation Beats Forecasts as Powell Stresses Tight Policy

U.S. Inflation Beats Forecasts as Powell Stresses Tight Policy: The annual inflation rate in
the United States accelerated beyond expectations in January,
reinforcing the likelihood that the Federal Reserve will maintain high interest rates for longer.

According to data released on Wednesday, the annual Consumer Price Index (CPI) inflation rose to 3%,
surpassing forecasts of 2.9%.
Meanwhile, core inflation, which excludes food and energy prices,
remained steady at 3.3%, while expectations pointed to a slowdown to 3.2%.

 

Content

Details
Inflation Data Impact
Fed Decisions

 

 

 

 

Details

On a monthly basis, the CPI increased by 0.5% in January,
compared to gains of 0.4% and 0.3% in the previous two months.
The core index also rose by 0.4%, following a slowdown to 0.2% in December.

Higher housing costs, transportation services, and new and used vehicle prices primarily drove these increases.
In contrast, clothing prices declined, and healthcare costs remained stable.
Meanwhile, food prices increased by 0.4% monthly, compared to 0.3% in December,
while energy prices dropped by 1.1% after rising 2.4% in the previous month.

 

Inflation Data Impact on Interest Rate Expectations

The inflation data affected investor expectations regarding interest rate cuts,
with projections for two rate cuts this year shrinking to just one amid uncertainty over the impact
of President Donald Trump’s trade and immigration policies on the economy.

Futures markets now price in a 40.1% probability of a 0.25% rate cut at the Fed’s December 2025 meeting,
up from 37% the previous day and 28.5% a week earlier.
Meanwhile, expectations for holding rates steady at the September 2025 meeting rose to 41.9%, compared to 29.9% the previous day.

 

 

 

Powell: Fed Decisions Will Not Be Influenced by Trump’s Calls for Rate Cuts

Federal Reserve Chair Jerome Powell, speaking before the U.S. Congress on Wednesday,
reaffirmed that Trump’s calls for interest rate cuts will not influence the central bank’s decisions.

“You can trust that we will continue to make decisions based on economic data, not political pressure,
” Powell stated. He emphasized that the Fed’s monetary policy will remain restrictive to curb demand and control inflation,
noting that recent inflation data aligns with progress toward the target but still falls short of the desired level.

Responding to a question from Democratic Representative Maxine Waters,
Powell denied any communication with Elon Musk,
who is leading efforts to cut federal spending as part of the so-called “Department of Government Efficiency.”

Trump had called for interest rate cuts while imposing new tariffs
before the January inflation report confirmed persistent price pressures.

 

U.S. Inflation Beats Forecasts as Powell Stresses Tight Policy

Federal Reserve December Meeting Minutes

Federal Reserve December Meeting Minutes: Progress in Reducing Inflation with Caution

The Federal Reserve released its December meeting minutes,
shedding light on members’ views on monetary policy and the economy.
The minutes indicated progress in reducing inflation toward the 2% target,
but inflation remains relatively high, necessitating a cautious monetary policy stance.

 

Contents:

 

 

 

 

Monetary Policy and the Economy

The committee members affirmed that the U.S. economy continues to grow robustly,
with improved labor market conditions, despite a slight uptick in the unemployment rate.
Most members agreed on a 25-basis-point rate cut, bringing interest rates to the range of 4.25% to 4.5%,
aiming to promote economic stability and curb inflation.
However, some members preferred maintaining rates unchanged, citing elevated inflation risks.

 

Future Approach to Monetary Policy

The minutes highlighted that the committee may have reached a point where a slower pace of easing monetary policy is necessary,
with a focus on evaluating economic forecasts and the impact of previous decisions.
It was emphasized that any future decisions would be data-dependent and aligned with achieving inflation and employment goals.

 

 

 

 

 

 

Economic Risks

Despite progress in containing inflation, members pointed to potential risks,
including increased consumer spending and mounting inflationary pressures.
They also stressed the importance of monitoring external economic factors,
such as trade and immigration policies, which could influence the U.S. economy.

 

Inflation and Interest Rate Outlook

Many members predicted that inflation might remain elevated for a longer period,
necessitating the continuation of restrictive monetary policy.
However, gradual easing could be considered if economic conditions improve faster than expected.

The December meeting minutes underscore the Federal Reserve’s focus on balancing economic support with controlling inflation,
emphasizing a cautious and deliberate approach to evaluating future developments.

 

 

 

 

Federal Reserve December Meeting Minutes

Key Market Events and Trends for the Week

Key Market Events and Trends for the Week: This week has significant economic events across major economies,
including key data releases, central bank decisions, and market-moving speeches.
Traders and investors closely monitor updates from the Federal Reserve, Bank of England, and Bank of Japan,
alongside critical economic indicators such as CPI, GDP, and PMI figures.
Additionally, global developments and technical patterns significantly influence oil prices and currency pairs like USDJPY, EURUSD, and NZDUSD.

 

Content

Economic Events

Oil

USDJPY

EURUSD

NZDUSD

Dow Jones

 

 

Economic Events

Monday, December 16, 2024

Retail Sales (YoY) (November) -China- 05:00
Manufacturing PMI (December) -United States- 17:45

Services PMI (December) -United States- 17:45

Speech by BoC Governor Macklem -Canada- 23:45

Tuesday, December 17, 2024

Core Retail Sales (MoM) (November) -United States- 16:30

Retail Sales (MoM) (November) -United States- 16:30

Consumer Price Index (YoY) (November) -Canada- 16:30

Wednesday, December 18, 2024

Consumer Price Index (YoY) (November) -United Kingdom- 10:00

Consumer Price Index (YoY) (November) -Eurozone- 13:00

Federal Reserve Interest Rate Decision -United States- 22:00

Federal Reserve Press Conference -United States- 22:30

Thursday, December 19, 2024

Bank of Japan Interest Rate Decision -Japan- 06:00

BoE Interest Rate Decision (December) -United Kingdom- 15:00

GDP (Quarterly) (Q3) -United States- 16:30

Initial Jobless Claims -United States- 16:30

Existing Home Sales (November) -United States- 18:00

Friday, December 20, 2024

PBoC Loan Prime Rate -China 04:15

Core Personal Consumption Expenditures (PCE) Price Index (YoY) (November) -United States- 16:30

Core PCE Price Index (MoM) (November) -United States- 16:30

Government Budget Balance (YoY) (October) – Canada-19:00

 

Oil

The Oil continues its upward trend, trading around $71 per barrel
following reports of new sanctions by the United States on Iran.
Oil is expected to maintain its rally, targeting $72.3. If this level is breached,
it could rise to $74.17 and $76.21. However, oil may resume downward if reversal patterns appear around $72.3.

 

USDJPY

The USDJPY pair trades around 153.66 after breaking above 153.40 and closing higher.
The yen has weakened recently due to expectations that the Bank of Japan will keep interest rates unchanged this month,
increasing pressure on the currency.
From a technical perspective,
the pair is expected to continue its upward trend, targeting 155.90.

 

 

 

 

EURUSD

The EURUSD pair is trading around 1.0498, rebounding from support at 1.0453.
This supports the beginning of an upward corrective wave, targeting resistance at 1.0609.
Markets are awaiting the Federal Reserve’s decision this week, which is expected to result in a 25-basis-point rate cut.

 

NZDUSD

The NZDUSD pair is trading around 0.5760 after breaking key support at 0.5777,
reflecting continued weakness in the New Zealand dollar against a basket of currencies.
If the Federal Reserve’s decision strengthens the U.S. dollar,
this could push the pair down to target levels of 0.5660 and 0.5512.

 

Dow Jones

The Dow Jones experienced a downward correction recently due to profit-taking
after a recent rally and market anticipation of the Federal Reserve’s decision this week.
From a technical perspective,
the index appears to be continuing its downward movement to retest the support area around 43,310,
where it could bounce off the upward trendline and begin a new rally.

 

 

Key Market Events and Trends for the Week

Tech Leads Markets Amid Global Rate Decision Anticipation

Tech Leads Markets Amid Global Rate Decision Anticipation:
Financial markets are experiencing cautious anticipation as the Federal Reserve’s meeting approaches next week.
U.S. tech stocks continue to deliver exceptional performance while global bond markets decline.
At the same time, U.S. and international economic indicators
provide mixed signals about the economy’s direction and monetary policies.

 

Content

Tech Stocks

The Federal Reserve

Tech Leads Markets

Bond Declines

The U.S. Dollar

Declining Asian Stocks

Oil Prices

Conclusion

 

 

 

 

 

Tech Stocks Continue to Break Records

Major U.S. tech stocks have continued their record-breaking gains,
while Treasury bonds have declined as Wall Street braces for a potential
slowdown in the Federal Reserve’s rate-cutting pace ahead of its next meeting.

The Nasdaq 100 index rose for the fourth consecutive week,
supported by strong performances from semiconductor technology companies,
Broadcom leading the way on Friday.
The index, known for its focus on tech stocks, climbed 0.8%,
reaching a new record high for the second time in three days.
In contrast, other U.S. indices struggled, with the S&P 500 falling by 0.6% for the week
and the Dow Jones Industrial Average declining by 1.8%.

Broadcom’s stock jumped 24% to a record high,
driven by the company’s expectations of a significant increase in demand for its AI chips.
This boosted its market valuation to $1 trillion. Other companies,
including Marvel Technology, Micron Technology, and Nvidia Corp, also saw notable gains.

 

 

The Federal Reserve and the Anticipated Rate Cuts

The Federal Reserve’s expected rate cuts will likely support the ongoing market rally,
with the tech sector continuing to lead the gains.
The S&P 500 has risen by 27% since the beginning of the year,
and analysts predict its strong performance will persist compared
to European indices through 2025.
However, the lackluster performance of other stocks
has raised concerns among investors about the growing disparity between the tech sector and the broader market.

 

Tech Leads Markets Amid Global Rate Decision Anticipation

Tom Essaye, founder of The Sevens Report, stated,
“The tech sector continues to affirm its dominance in the market,
driven by the momentum of AI and quantum computing.”
However, he noted that the robust performance of tech stocks has overshadowed the rest of the market.

According to data from Bespoke Investment Group,
the number of advancing stocks in the S&P 500 has not outpaced declining stocks in any December session,
marking an unprecedented streak in over 20 years.

 

Bond Declines: A “Hawkish” Rate Cut?

U.S. Treasury bonds continued their downward trend,
with the 10-year bond yield rising to 4.40%.
Ian Lyngen of BMO stated that the market is preparing for a new move by the Federal Reserve,
likely to be described as a “hawkish” rate cut.
Following mixed data this week,
investors have scaled back their expectations for significant monetary easing,
reflecting uncertainty around the central bank’s decisions.

 

 

 

The U.S. Dollar Outperforms in Currency Markets

The U.S. dollar remained stable against a basket of major currencies
in the currency markets but is on track for its second consecutive week of gains.
Timothy Graf from State Street Global Markets projected further dollar strength,
noting that the U.S. monetary easing cycle might be shorter than Europe’s.
Meanwhile, the British pound declined due to continued economic contraction in the UK,
while the Euro strengthened following less dovish signals from the European Central Bank.

 

Declining Asian Stocks and Continued Uncertainty in China

Earlier, Asian stock indices fell as a significant economic meeting
in China pledged to stimulate consumption but failed to provide precise details on fiscal stimulus plans.
The global stock index is expected to record its worst weekly performance in nearly a month.

Beata Manthey, Head of European Equity Strategy at Citi Group,
commented on the announcements from China, saying, “The flow of news was disappointing,”
and added, “Markets want numbers, but we didn’t get them.”

Nevertheless, Chinese 10-year government bond yields fell below 1.8%
for the first time in history, authorities pledged to cut interest rates
and reduce banks’ reserve requirement ratios.
Analysts at Bank of America noted that investors poured $5.6 billion
into Chinese equity funds over the past week,
attributing these inflows to promises of monetary easing by Chinese authorities.

 

Oil Prices Rebound

In the energy market, Oil prices surpassed $71 per barrel.
West Texas Intermediate crude gained 6% this week,
driven by expectations of stricter U.S. sanctions on Iran and Russia, further tightening global supply pressures.

 

Conclusion

Financial markets are witnessing dynamic movements across tech stocks, bonds,
and currencies as they await the Federal Reserve’s decisions,
which could shape the trajectory of the markets in the coming period.
The focus remains on how monetary policies will impact
various sectors and how global markets respond to mounting economic challenges.

 

Tech Leads Markets Amid Global Rate Decision Anticipation

The Federal Reserve Lowers Interest Rates

The Federal Reserve Lowers Interest Rates for the Second Consecutive Time, Emphasizing Labor Market Stability and Slowing Inflation

The U.S. Federal Reserve’s Monetary Policy Committee, after its meeting on Thursday, decided to reduce U.S. interest rates by 25 basis points, bringing the upper limit of the federal funds rate to 4.75%, in line with market expectations.

 

Content

 

 

 

 

Details

This is the second consecutive rate cut following the decision in the September meeting,
as the Fed aims to support the economy amid declining inflation and a slight rise in unemployment.

In its monetary policy statement, the committee affirmed that economic activity continues to expand and that the labor market has improved compared to the beginning of the year.
However, inflation remains slightly above the 2% target.
The committee also expressed a balanced view of economic risks and stressed the importance of monitoring economic data to adjust the course of monetary policy.

 

 

Key Points

of the Monetary Policy Statement:

  • Economic activity continued to expand with improvements in the labor market.
  • Inflation is progressing toward the target but remains relatively high.
  • The Federal Reserve lowered the interest rate to a range of 4.5% – 4.75%.
  • Future interest rate decisions will depend on economic data and risk balance.

The Federal Reserve reaffirmed its commitment to guiding its monetary policy to support full employment and bring inflation back to its 2% target, while monitoring both domestic and international economic conditions. The Fed also indicated it would adjust its policies if risks emerge that threaten the achievement of its goals.

 

 

The Federal Reserve Lowers Interest Rates for the Second Consecutive Time

Stock markets continue to rise Ahead of Key Inflation Report

Stock markets continue to rise Ahead of Key Inflation Report: As Wall Street gears to release crucial inflation data,
the stock market continues to soar, with the S&P 500 setting new all-time highs.
Traders eagerly await the Consumer Price Index (CPI) report to gauge the Federal Reserve’s next steps regarding interest rate cuts.
Meanwhile, other financial markets react with notable movements, including bonds and currencies.

 

Content
Stock Market Hits Record Levels
Technology Stocks

Federal Reserve’s Dovish Stance
Market Movements
Inflation Moderation

Investors’ Expectations

What’s Next for the Bull Market?

Bill Gross’ Forecast

Summary of Market Movements

 

 

 

 

 

Stock market continues to soar and Hits Record Levels

On the brink of the CPI report, the S&P 500 neared 5,800 points, marking its 44th record close in 2024.
Technology stocks again led the charge, with Apple shares climbing 1.7%.

Nvidia paused its five-day rally, while Tesla shares dipped slightly ahead of its highly anticipated Robotaxi launch.

Alphabet, Google’s parent company, dropped 1.5%
following news, the U.S. government is considering breaking up the tech giant in a landmark antitrust case.

 

Technology Stocks: Buying Opportunity Amid Volatility

Despite recent volatility in major tech stocks, experts see this as a buying opportunity.
Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management, stated,

“We remain positive on the tech sector, particularly with the outlook for artificial intelligence.

We believe volatility should be used to build long-term AI exposure.”

 

Federal Reserve’s Dovish Stance

The release of the Federal Reserve’s latest meeting minutes showed some internal debate over a half-point rate cut,
with some officials favoring a more minor reduction.
Despite this, markets remained largely unaffected.
David Russell from TradeStation remarked,
“The Fed minutes were uneventful, which could be a good sign for stock investors.
Policymakers agree inflation is fading, leaving rate cuts on the table if needed.”

 

 

 

Market Movements Ahead of CPI Report

As stocks surged, the S&P 500 rose by 0.7%, the Nasdaq 100 added 0.8%,
and the Dow Jones Industrial Average climbed by 1%.
In other markets, the U.S. dollar hit its longest winning streak in over two years,
rising 0.4%, U.S. 10-year Treasury yields increased by five basis points to 4.06%.

 

Inflation Moderation and Economic Outlook

The upcoming CPI report is expected to show a 0.1% increase in consumer prices for September,
the smallest gain in three months.
Over the past year, CPI likely rose by 2.3%, marking six consecutive months of slowing inflation.

Core inflation, which excludes food and energy,
is expected to increase by 0.2% for the month and 3.2% compared to September 2023.

Matthew Weller from Forex.com commented, “With the Fed shifting focus from inflation to the labor market,

tomorrow’s CPI report may cause less market movement than expected,

though volatility is still possible following the strong jobs report.”

 

Investors’ Expectations and Economic Optimism

A recent survey from 22V Research revealed mixed investor sentiment about the market’s reaction to the CPI report.
While 42% of investors expect a minimal or mixed response, 32% predict a risk-off approach,
and 25% anticipate a risk-on reaction.
Dennis DeBusschere, founder of 22V, noted growing optimism about inflation,

adding that fewer investors expect a recession,
though concerns about tightening financial conditions remain.

 

What’s Next for the Bull Market?

According to Ed Clissold of Ned Davis Research,

inflation must keep moderating for the stock market rally to continue,
the economy must land softly, and corporate earnings must stay robust.
As the bull market approaches its second anniversary,

broader market participation could fuel the next phase of stock gains,
particularly as large-cap and growth stocks outperform small-cap and value shares.

 

Bill Gross’ Forecast: Lower, But Positive Returns

Bill Gross is a billionaire investor and co-founder of Pacific Investment Management Co.
predicts that investors can still expect low but positive returns while the market rally is slowing.
He recommends maintaining average stock exposure, focusing on defensive stocks,
and holding a small bond position.

Gross said, “No bear market, but it’s not the same bull market anymore.”

 

Summary of Market Movements

Stocks: The S&P 500 rose 0.7%, the Nasdaq 100 added 0.8%,
and the Dow Jones Industrial Average climbed 1%. 

Currencies: The Bloomberg Dollar Spot Index gained 0.4%,
the euro fell 0.4% to $1.0939, and the Japanese yen weakened by 0.8% to 149.32 per dollar.
Cryptocurrencies: Bitcoin fell 2.2% to $60,966,
while Ether dropped 1.1% to $2,415. –
Commodities: West Texas Intermediate crude slipped 0.2% to $73.44 per barrel,
and spot gold declined 0.5% to $2,609.26 an ounce.  

 

 

Stock markets continue to rise Ahead of Key Inflation Report