#federal-reserve-policy

#federal-reserve-policy

With all the chatter and commentary about the internet (or dot-com) bubble burst and even the great stock market crash of 1929, it's quite an unsettling time to be an investor in the markets, as the S&P nears new highs after a 2.3% gain for the month of October. For the tech-heavy Nasdaq 100, it was an even brighter month, with the index nearly rising 5% in a month.

Silver prices declined for a third consecutive session on Tuesday, as investor focus shifted to recent statements from Federal Reserve officials and signs of easing US-China trade tensions. Fed officials, including Mary Daly and Lisa Cook, emphasized a data-dependent stance ahead of the December meeting. While both expressed support for the latest 25 bps cut, they cautioned that further moves would depend on incoming economic indicators.

U.S. stocks signaled another rally on Sunday night after the Trump administration negotiated a framework for a trade deal with China that should avoid mutual assured destruction. Treasury Secretary Scott Bessent offered rough outlines of an agreement that include China easing rare earth export restrictions and buying "significant" amounts of U.S. soybeans in exchange for President Donald Trump removing his threat of adding 100% tariffs on China.

At the end of the second quarter, the average U.S. bank paid depositors an annual interest rate of 2.2%, according to Federal Deposit Insurance Corporation data. This is higher than the 0.2% rate two years ago but well below the Fed's 5.5% overnight rate. JPMorgan Chase and Bank of America reportedly paid 1.5% and 1.7% on average, respectively. Those lower payments to depositors generated roughly $1.1 trillion in additional revenue, about half of total bank income over the period, the Financial Times' calculations indicate.

Most economists believe the Fed will cut rates at its meeting next week after recent data revealed a labor market that's been softening for longer than previously thought. While inflation also remains stubbornly above the U.S. central banks 2% target and is forecast to have risen again in August, Fed officials have increasingly expressed concern about a slowing U.S. job market.

It's not like there's going to be a recession ... right?

Donald Trump returned to the White House promising to boost job creation. So far this hasn't happened: the labor market is weakening and, for the first time since the Covid pandemic, is beginning to show negative job growth. According to indicators released on Friday, 22,000 non-farming jobs were added in August, far lower than the 76,000 new positions economists had been expecting to see.

Wall Street is holding steady Thursday as the countdown ticks to an update on the U.S. job market coming Friday that could clear the way for the cuts to interest rates that investors love. The S&P 500 was virtually unchanged in morning trading. The Dow Jones Industrial Average was down 52 points, or 0.1%, as of 10:10 a.m. Eastern time, and the Nasdaq composite was flat.

Silver traded recorded some volatility on Tuesday, hovering near its highest level since 2011, as investors weighed macroeconomic signals and industrial momentum. Markets continued to price in a near 90% probability of a 25 bps Federal Reserve rate cut later this month, following dovish remarks from San Francisco Fed President Mary Daly, who warned of labour market fragilities and described tariff-driven inflation as likely transitory. Ongoing concerns over the Fed's independence and broader uncertainty around US trade policy kept safe-haven demand elevated.