Market On Open, Monday 8 December
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FOMC
by Alex King, CEO, Cestrian Capital Research, Inc
This week sees the final FOMC of 2025 and one of the last under the influence of Chairman Powell. Absolutely everyone expects a 25bps rate cut and absolutely no-one knows how Powell’s comments will be received. Labor market data looks very weak at the moment, at least if the headlines are even half correct.
That's a lot of pressure on the Fed to cut more aggressively in my view. I don’t suppose there will be a 50bps surprise cut, Powell isn’t built that way to my eye (there was a surprise +75bps hike in 2022 but that was well telegraphed by the Wall Street Journal ahead of time); but at the press conference I would expect this labor market weakness to be brought up and Powell’s response should be studied for clues as to the 2026 rate path. If nothing else I think it sets the scene for Powell’s replacement - which looks like being Kevin Hassett - to cut faster next year. If so then I would expect that to benefit risk assets (cheaper money available with which to buy securities on margin) at least in the short term. .
Now let’s get to work. Bonds, volatility, equities, sectors, crypto, oil … we have it right here for you as always.
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