🇺🇸🚨 The Federal Reserve signaled this week that it remained open to a rate cut in 2026, which was well received by investors. The market was already prepared for a "hawkish rate cut," meaning a reduction in the federal funds rate, while suggesting it was not willing to adjust rates further. U.S. stock markets rose along with bonds, with the Dow Jones Industrial Average climbing nearly 650 points (1.3%) on Thursday, reaching a new historical high. Despite divergences within the Fed and a mixed signal broadcast on Wednesday, many still see signs indicating that a slight additional weakness in the labor market could prompt the central bank to cut rates again in the coming months. The Fed announced it would expand its balance sheet by purchasing short-term Treasury bills, a measure aimed at easing recent pressure on the overnight lending market, which also encouraged investors. The latter expect the Fed to be very different next year, as Trump has already begun this week a final series of interviews for the potential successor to Powell.
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