Markets entered the week focused squarely on the Federal Reserve, and the outcome delivered little surprise but meaningful consequences. On Wednesday, the FOMC implemented a widely expected 25bp rate cut, lowering the federal funds target range from 3.75%-4.00% to 3.50%-3.75%, formally ending the 4% policy-rate era.
There are times when a chart looks so extended that every instinct says, “This has to pull back soon.” Gold gave that exact feeling through much of October. It moved fast and it barely paused. Every dip was small and short-lived. And if you were looking at any typical momentum indicator (like the RSI), you’d have seen the same message repeating: overbought.
Investors have spent the past two years in a will-it-or-won’t-it debate, wondering if economic growth could really hold up while inflation cooled off. Central banks have been trying to control inflation without triggering a recession, and as price pressures ease, markets keep asking: is this time different?
With long-delayed data finally released post-shutdown, investors welcomed signs of easing inflation, core PCE rose just +0.3% in September. Early-December sentiment surveys ticked up, but labor market softness lingered. Markets expect the Fed to cut rates by 25bps at the December 9-10 meeting. Optimism remains fragile, but most traders now anticipate a third consecutive cut as the Fed aims to cushion a slowing economy.
Markets ended the final week of November on firmer footing as investors priced in a growing likelihood of a Federal Reserve rate cut at the December 9-10 meeting. Softer US data following the post-shutdown backlog and easing Treasury yields helped shift sentiment toward a more dovish outlook.
