The futures market, at least, is confident the Federal Reserve will cut rates by a quarter point to 3.50-3.75% later in the day, pricing it at an 89% probability. Yet it also assumes the guidance will be hawkish, implying just a 21% chance of a January move.
Much will depend on how many "dot plot" forecasts from Fed members see one, two or no more cuts next year. Analysts also suspect at least two of the 12 voters could dissent against a cut this time around, putting Chair Jerome Powell in a tricky position just as speculation peaks on who will replace him next year.
Lingering inflation concerns and bets on U.S. economic resilience mean investors have already dialed back expectations of how many more cuts there will be from here.
In anxious bond markets, 10-year Treasury yields are steadying at 4.197%, having climbed from a low of 3.962% in just nine sessions. A break of 4.201% chart support would risk a spike toward 4.535%, making the Fed's outlook later all the more important.
Those rises in yields have put a prop under the dollar in recent weeks. It is a touch weaker this morning, although there was also another sudden bout of selling in the yen overnight, which looked to be driven by momentum-tracking funds.
That spill threatened to push the Japanese currency below the 157 yen per dollar level. It also flopped to a record low against the euro and slid nearly 1% against the Aussie before regaining its footing.
There was little to trigger the move, suggesting it was likely some positioning ahead of the Bank of Japan's (BOJ) policy meeting next week where a 25-basis-point hike is widely expected, although what comes next remains a blur.
The weeks leading up to this Fed meeting have been stressful for investors, with little data to parse during a record 43-day U.S. government shutdown, conflicting messages from the central bank's officials and the unrelenting push from President Donald Trump's administration for lower rates.
Data on Tuesday showed U.S. job openings increased marginally in October after surging in September. White House economic adviser Kevin Hassett, the front-runner to be the Federal Reserve's next chair, also told the WSJ CEO Council there was "plenty of room" to cut interest rates further, though he added that if inflation rises the calculation may change.
Back on Wall Street, S&P, Dow and Nasdaq futures are all flat for now as traders await the Fed. There's earnings coming from data server giant Oracle. AI demand is expected to drive a more than 15% jump in revenues, which would be the fastest pace of growth in more than two years. Cloud infrastructure revenue is also expected to have surged over 70% in the September-November period to beat the already-punchy 55% growth seen in the prior quarter.
Silver is again the star in commodities, having cleared the $60 barrier to reach a record $61.45 per ounce. The metal has more than doubled in price this year as inventories have dwindled and amid broad-based bullishness about demand.
Europe's government bond markets meanwhile looked to have steadied having been jolted on Tuesday when one of the European Central Bank's top policymakers, Isabel Schnabel, said the bank's next move was more likely to be a hike than a cut. Traders have lowered the premium between French and German debt, however, after a French social security budget passed a knife-edge vote.
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