The Federal Reserve's monthly meeting is expected to conclude today in December, where the final decision regarding interest rates for 2025 is expected to be announced. Wall Street generally expects Federal Reserve Chair Powell to announce a reduction of 0.25 percentage points, which would be the third cut this year, lowering the federal funds rate range to 3.75%-4%. Despite delays in the release of employment data and inflation for November, a modest increase in consumer spending last week bolstered easing expectations. The CME FedWatch tool indicates that the probability of a rate cut stands at 88%. Analysts have warned that if Powell's remarks lean towards tightening, it could lead to increased market volatility, affecting the policy trajectory for 2026.
U.S. stocks experienced slight fluctuations, and the bond market is under pressure.
The three main U.S. stock indices slightly increased at the beginning of the session, with the Dow Jones rising by 0.1%, the S&P 500 remaining stable, and the Nasdaq falling by 0.14%, as hedging sentiment among investors increased while waiting for a signal from the Federal Reserve. Yields on 10-year U.S. Treasury bonds rose to 4.18%, driven by better-than-expected job vacancy data for October (7.67 million, compared to an expectation of 7.12 million), showing resilience in the labor market. Asian markets saw a general rise, while European markets remained stable, and the VIX volatility index dropped by 10.33% over five days.
Bitcoin is under pressure at the end of the year, and the cryptocurrency market is experiencing a recession.
The Bitcoin journey for 2025 is expected to end with an annual decline, as it has continued to weaken since the collapse on October 10, affected by uncertainties surrounding the artificial intelligence market and the trajectory of interest rates. Pantera Capital partner, Cosmo Jiang, stated that risk markets have experienced intense liquidation. Previous forecasts from Standard Chartered indicated a price of $200,000 by the end of the year, but the target has now been lowered. Although the Federal Reserve's dovish signals may bolster cryptocurrencies, the increasing correlation with the stock market makes a short-term recovery difficult.
The dollar is declining, and the yen is under pressure.
The dollar index fell slightly as traders bet on a rate cut from the Federal Reserve, and the euro/dollar rose to 1.1622. Expectations for an interest rate hike from the Bank of Japan (BOJ) on December 19 increased, causing the yen to fall against the dollar to 155.87, while the global bond market stabilized, with the yield on 10-year German bonds slightly declining to 2.752%.
These events highlight the sensitivity of global financial markets and may cause Federal Reserve decisions to reshape market movement at the end of the year.$GIGGLE $DCR
