"Asian stocks were down this morning and Europe was flat, but investors in U.S. equities were ignoring all that in renewed hopes that the U.S. Federal Reserve will cut interest rates in December, thus fueling asset markets with a new round of cheaper money. Nasdaq 100 fixtures were up 0.46% this morning, premarket. S&P 500 futures were up 0.25%, after the index closed up 0.98% on Friday."
"Last week, Wall Street seemed to have decided that a December cut was off the table. On Wednesday, the CME Fedwatch futures index placed the probability of a cut at just 30%. Markets sold off dramatically. The S&P 500 lost 2% last week. Fears of a bubble in AI didn't help, either. Today, speculators put the probability of Fed Chairman Jerome Powell delivering a rate cut at 75.5%."
""My assessment is that the downside risks to employment have increased as the labor market has cooled, while the upside risks to inflation have lessened somewhat," he said. "Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral.""
Asian and European markets weakened while U.S. futures rose on renewed expectations of a December Federal Reserve rate cut, with Nasdaq 100 futures up 0.46% and S&P 500 futures up 0.25%. Last week the market had priced only a 30% chance of a cut and the S&P 500 fell 2%, amid AI bubble fears. Speculative odds have since jumped to roughly 75.5%. New York Fed President John Williams signaled that downside risks to employment have increased and upside inflation risks have eased, creating room for a near-term policy adjustment. Delayed government data and weakening labor indicators supported the repricing, and Goldman Sachs analysts suggested the September jobs report could have sealed a 25bp cut at the December meeting.
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