Wall Street is adopting a wait-and-see approach before the Federal Reserve (Fed) announces its final interest rate decision of the year. Major U.S. stock indices opened with fluctuations on Tuesday (9th). The yield on the 10-year U.S. Treasury bond has retreated from its recent two-month high, as investors paused large bets, waiting for policy guidance and cues on the monetary path for 2026. In the tech sector, Nvidia's stock price has fluctuated due to inconsistent U.S. export policies on AI chips to China.
Before the Federal Reserve (Fed) announces its final interest rate decision of the year this week, the market remains cautious. U.S. stock index futures are fluctuating, and the yield on the 10-year U.S. Treasury bond hovers near a two-month high. Investors are reluctant to preemptively bet on the policy path, leading to a conservative trading atmosphere in the stock and bond markets.#美联储重启降息步伐
The S&P 500 index futures changed little, temporarily halting after four consecutive days of gains. The yield on the 10-year Treasury bond remains at 4.16%, having previously reached a high since the end of September. The dollar and Bitcoin are consolidating, and market trading has slowed. In recent days, the decline in U.S. Treasury prices has weakened investment risk appetite, with traders becoming more conservative regarding the extent of monetary easing next year, now only betting on two rate cuts, below the more optimistic expectations of a few weeks ago.
ING Chief Investment Strategist Vincent Juvyns stated that at a time when the global bond market is under significant strain, "the Fed meeting could become a variable that adds fuel to the fire," and pointed out that this week also includes earnings reports from tech companies, including Oracle and Broadcom, which could become market focal points.
In pre-market trading, Nvidia rose 0.8%, after U.S. President Trump approved the company's export of H200 artificial intelligence (AI) chips to China. Paramount Skydance continued its upward trend, as the company is attempting a hostile takeover of Warner Bros. Discovery; Netflix's stock price also increased.
Currently, market focus is on the Fed's decision and policy guidance for 2026. Options trading indicates that the volatility of the U.S. stock market may be higher than in recent decisions after this meeting, with implied volatility reaching about 0.7%. Before the interest rate announcement, the market awaits the soon-to-be-released JOLTS job openings report, with (Bloomberg) economists expecting that the data will show a slight cooling in the labor market for September and October.
In the global market, the bond market is under pressure, primarily due to multiple central banks hinting that the easing cycle may be coming to an end. Reserve Bank of Australia Governor Michele Bullock stated on Tuesday that the country's rate-cutting cycle has ended; European Central Bank board member Isabel Schnabel expressed comfort regarding future rate hikes; and the Bank of Japan is widely expected to raise rates next week.
Although the Fed's easing cycle remains in place, investors must contend with differing views among decision-makers, statistical delays caused by government shutdowns, and the uncertainty surrounding the end of Powell's term in May next year and his successor's stance, which increases the variability of the policy path.
Danish bank strategist Filip Andersson noted that if future Fed policies are more influenced by political factors, it may guide market expectations for quicker rate cuts, leading to a decline in short-term yields; simultaneously, higher long-term inflation expectations may push up long-term yields, causing the yield curve to become steeper.
(Bloomberg) Strategy Analyst Cameron Crise stated that the market widely expects the Fed to slightly lower interest rates at this meeting and hint at further easing next year, but the global situation indicates that U.S. policy expectations are becoming "increasingly inconsistent" with those of other central banks. He believes that this decision could become a "hawkish cut," but under hawkish pressure, a more dovish surprise cannot be ruled out.
