Family, big news is here! Almost 90% of people in the market think the Federal Reserve will definitely cut interest rates tonight!
Just now, CME data shows that the probability of a rate cut in December has skyrocketed to 89.6%, which is basically the same as directly telling us that a cut is guaranteed tonight. If there is no cut tonight, it would really be a huge surprise!
However, there is something to pay attention to: the key data will not be released until January. On January 9, the employment report for December will be released, and on January 13, the CPI inflation data and real income data for December will be published. Looking at it this way, it seems like the Fed cutting rates tonight is like cutting with eyes closed, as there is really no key data to refer to.
Now in the market, everyone is frantically betting on a rate cut tonight, but the real data will take a month to know. If the data released in January goes against expectations, for example, if inflation rebounds again, then the market will definitely take a sharp turn, and at that time, the situation will be hard to predict.
So, the most critical point tonight is not whether there will be a rate cut, but how Powell will talk about it. Will he hint that there will be a cut this time, and future decisions will depend on the data situation? Or will he indicate that a series of cuts will begin next?
I have to say, it is not common for a sudden rate cut in December; once it happens, it likely indicates that the economy really can't hold up anymore. The US stock market has already risen quite a bit, so we must be cautious about the situation where good news has been fully priced in, and it may fall afterwards. Also, the RMB exchange rate is likely to fluctuate again.
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