The market widely expects the Federal Reserve to cut interest rates by 25 basis points, with the current focus shifting to the Fed's subsequent policy trajectory, particularly signals conveyed through the dot plot and economic forecasts. Sentiment in the U.S. stock and bond markets remains cautious, silver continues its robust upward momentum, oil prices have stabilized, and markets are closely monitoring the situation between Russia and Ukraine.
The market is awaiting the Federal Reserve's latest interest rate decision, with overall sentiment trending cautiously and U.S. stocks and bonds experiencing narrow fluctuations.
On December 10, U.S. stock index futures were largely flat, European stocks opened lower, and Asian stock markets showed mixed performance. U.S. Treasury yields consolidated at high levels, while the dollar and yen faced pressure. Commodities performed unevenly, with gold prices retreating slightly, silver extending its gains after hitting new highs, oil prices stabilizing, and cryptocurrencies posting modest increases.
Although a third interest rate cut this year is widely anticipated, investors have shifted their focus to the subsequent policy trajectory, especially signals from the dot plot and economic forecasts. Analyst Chen Hebei of Vantage Markets in Melbourne stated:
“As investors closely monitor one of the Fed’s most ‘known yet unknown’ stimulus measures this year. While a 25-basis-point rate cut is widely considered a done deal, the real factor for volatility will be the Fed’s economic projections. This time, the forecast release method is unusual, missing complete verification data for a quarter — leaving significant room for market interpretation and volatility.”
The core market movements are as follows:
- U.S. stock index futures edged up collectively, with S&P 500 futures rising 0.05%, Nasdaq 100 futures gaining 0.01%, and Dow Jones futures increasing 0.03%.
- The Euro Stoxx 50 Index fell 0.06%, the FTSE 100 Index dropped 0.17%, the CAC 40 Index declined 0.24%, and the DAX 30 Index slipped 0.10%.
- The Nikkei 225 Index closed down 0.1% at 50,602.80 points; Japan's TOPIX Index ended up 0.1%; South Korea's KOSPI Composite Index finished down 0.21%.
- The yield on the 10-year U.S. Treasury note remained largely unchanged at 4.18%.
- The U.S. Dollar Index was little changed, with the yen rising 0.1% against the dollar to 156.70.
- Spot silver rose nearly 1.3% to $61.42 per ounce; Brent crude climbed 0.18% to $62.05 per barrel; spot gold fell 0.06% to $4,205 per ounce.
- Bitcoin prices remained largely unchanged at $92,623.68, while Ethereum rose 0.6% to $3,323.17.
Global markets are awaiting the outcome of the Federal Reserve's final meeting of the year on Wednesday. U.S. stock futures were little changed, while Treasury yields continued their volatile trading at elevated levels. The market widely expects the Fed to cut interest rates by 25 basis points for the third consecutive time. According to CME Group’s FedWatch tool, the probability priced in by the federal funds futures market for this rate cut is approximately 87.6%.
However, divisions persist within the Federal Open Market Committee (FOMC). Some members support continued rate cuts to mitigate risks of further softening in the labor market, while others worry that another cut could exacerbate inflationary pressures.
Investors are looking forward to further insights into policymakers' stance and inclination regarding future policy paths from the statement of this meeting and Federal Reserve Chair Jerome Powell’s press conference scheduled for Wednesday afternoon.
Kevin Hassett, a former White House economic advisor and considered a potential candidate for Federal Reserve Chair, stated that there is “significant room” to implement a larger-than-usual rate cut, potentially exceeding the standard 25 basis points.
Meanwhile, the market is closely watching Oracle’s second-quarter earnings report, which will be released on Wednesday Eastern Time (early Thursday morning Beijing time). According to Wall Street News, the focus is on its debt-driven AI infrastructure expansion plans and heavy reliance on OpenAI. In pre-market trading, Oracle shares edged up 0.4%, while the price of the company's five-year credit default swaps (CDS) surged to an all-time high.
Spot silver extended its record-breaking rally, rising nearly 1.3% to $61.42 per ounce, driven primarily by tight global supplies and expectations that the Federal Reserve will further ease monetary policy. David Wilson, Director of Commodity Strategy at BNP Paribas, said: "Silver has a vast retail and speculative base. Once upward momentum builds, it tends to attract more capital inflows."
