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The Federal Reserve meeting is coming to an end, and the market is holding its breath.
The Federal Reserve's December meeting concludes today, with the expected announcement of the last interest rate decision for 2025. Wall Street generally expects Chairman Powell to announce a 0.25 percentage point rate cut, marking the third rate cut of the year and bringing the federal funds rate range down to 3.75%-4%. Despite the delay in the release of the November employment and inflation data, last week's moderate increase in consumer spending has strengthened easing expectations. The CME FedWatch tool shows an 88% probability of a rate cut. Analysts warn that if Powell's remarks lean hawkish, it could trigger increased market volatility, affecting the policy path for 2026.
US stocks fluctuate slightly, bond market under pressure.
The three major US stock indices rose slightly in early trading, with the Dow up 0.1%, the S&P 500 flat, and the Nasdaq down 0.14%. Investor risk aversion is rising as they await signals from the Fed. The yield on the 10-year US Treasury rose to 4.18%, driven by better-than-expected October job vacancy data (7.67 million, higher than the 7.12 million forecast), indicating resilience in the labor market. Asian stock markets rose broadly, Europe remained flat, and the VIX fear index fell 10.33% over five days.
Bitcoin faces year-end pressure, crypto market sluggish.
Bitcoin's rollercoaster in 2025 may end with an annual decline, continuing its weakness since the crash on October 10, affected by doubts about the AI bull market and the interest rate path. Cosmo Jiang, a partner at Pantera Capital, stated that the risk market's break has intensified selling. Standard Chartered's original forecast of reaching $200,000 by the end of the year has now been downgraded. Although dovish signals from the Fed may boost crypto, the correlation with the stock market has increased, making a rebound unlikely in the short term.
US dollar weakens, yen under pressure.
The US dollar index has slightly declined as traders bet on a Fed rate cut, with the euro/USD rising to 1.1622. Expectations for a rate hike by the Bank of Japan (BOJ) on December 19 have increased, with the yen falling to 155.87 against the dollar. The global bond market is stabilizing, with the 10-year German bond yield slightly decreasing to 2.752%.
These events highlight the high sensitivity of global financial markets, and the Fed's decision may reshape the year-end market.