The Federal Reserve's unanimous vote to cut rates by 0.25% to 4.50-4.75% shows the central bank is staying on track with its plan to ease monetary policy, but the Trump presidency may shake things up. Donald Trump's victory has created new questions about where rates might go next year, with his proposed policies on tariffs and immigration being more inflationary. Fed Chair Jerome Powell made it clear he's not letting politics influence current decisions, though he'll need to watch how Trump's policies affect prices and jobs once they roll out. Wall Street is now betting on just two more quarter-point cuts through mid-2025, down from earlier predictions of deeper cuts, as Trump's planned moves could heat up inflation. Powell reiterated that he would not step down even if Trump asks him before his term ends in 2026, reassuring legal protections for his position. The Fed chief seems confident about where things stand, saying both the economy and Fed policies are "in a very good place," though he'll likely have his hands full managing rate decisions if Trump's economic agenda takes shape.
EQUITY
The S&P 500 and Nasdaq continue to hit new all-time highs, especially after the Federal Reserve cut rates. Although the market is riding high, Fed Chair Jerome Powell kept things flexible, saying they could slow down rate cuts if inflation stays stubborn or speed them up if the job market weakens. Communication and tech stocks led the rally, while banks took a hit as lower rates typically squeeze their profits. Wall Street sceptics warned that stocks could face a rough landing by early 2026.
GOLD
Gold prices slid below $2,700 after a wild crash following Trump's surprise election victory and only gained slightly after the Fed's latest rate cut that is now wiped out. While the Bank of America sees the shaky U.S. fiscal outlook supporting gold prices over the medium term, some technical analysts think the rally might already be running out of steam. Hedge funds seem to disagree with the cautious technical outlook, as their bullish bets on gold are sitting at four-year highs, while gold-backed ETFs have seen five straight months of growing investment.
OIL
Oil prices are heading for a solid weekly gain, adjusting to Donald Trump's victory. The rate cut did not help the already elevated oil prices as traders weighed competing factors. Markets are particularly focused on how Trump's presidency might affect global oil supplies, with many expecting stricter sanctions on major producers like Iran and Venezuela. China's declining oil imports add another layer to the picture, with October marking the sixth straight month of year-over-year drops, compounded by the potential pro-fracking Trump policy that will flood the market.
CURRENCY
The dollar pulled back after the Federal Reserve cut interest rates by a quarter point, marking its second straight meeting with a rate reduction. Markets are pricing in a 75% chance of another quarter cut in December. While Powell stayed quiet on exact timing, he made it clear the Fed wants to be careful. The rally in stocks and drop in bond yields put extra pressure on the dollar, pushing it down about 0.7% on the day. Traders have also started unwinding some of their 'Trump trades' that had sent the dollar higher earlier in the week