The Federal Reserve cuts interest rates but sends hawkish signals, U.S. stocks and bonds maintain upward momentum, the dollar fluctuates and then declines further, while gold and silver surge

On November 7th, Thursday, the Federal Reserve's November interest rate decision is approaching.

Before the Federal Reserve's Decision

Before the release of the Federal Reserve's decision statement, U.S. stocks and bonds rose during the day, the U.S. dollar index fell sharply, and gold surged:

• The S&P 500 index rose by 0.66%, the NASDAQ rose by 1.35%, and the Dow Jones was near flat.
• The yield on the U.S. 10-year Treasury bond fell by 8.6 basis points, stabilizing around the day's low of 4.3374%.
• The U.S. dollar index fell by 0.74%, reported at 104.38. The dollar fell by 1.07% against the yen, the euro rose by 0.66% against the dollar, and the pound rose by 0.76% against the dollar.
• Spot gold rose over 1.3%, stabilizing around the day's high of $2700.36 per ounce.

After the Federal Reserve's Decision

At 2 PM Eastern Time, which is 3 AM Beijing Time, the Federal Reserve cut interest rates by 25 basis points as expected, stating that the risks to employment and inflation targets are "roughly balanced," but the decision statement removed the wording about "gaining confidence in combating inflation." This interest rate decision was unanimously approved.

Some Federal Reserve observers speculate that the removal of the wording "gaining confidence in combating inflation" may suggest that policymakers are open to pausing interest rate cuts in December.

After the Federal Reserve's decision was announced, U.S. stocks fluctuated little, still showing significant gains during the day, U.S. bond yields narrowed their decline, and Bitcoin retreated:

• The S&P 500 index maintained a gain of 0.6%. The NASDAQ 100 fluctuated little, generally maintaining a gain of nearly 1.5% during the day. The NASDAQ Golden Dragon China Index for Chinese concept stocks saw a short-term pullback before rising again, with the gain expanding to 4.3%, refreshing the day's high.
• The yield on the U.S. 2-year Treasury bond narrowed its decline, rebounding from the day's low to 4.22%, still down about 4 basis points during the day.
• The U.S. dollar rose briefly, narrowing its decline during the day.
• Bitcoin significantly retreated about $500 from its daily high.
• Spot gold rose slightly, reported at $2693 per ounce.
• Oil prices closed up over 0.9%. WTI December crude oil futures rose by $0.67, an increase of 0.93%, reported at $72.36 per barrel. Brent January crude oil futures rose by $0.71, an increase of 0.95%, reported at $75.63 per barrel.

Powell's Press Conference

At 3:30 AM Beijing Time, Federal Reserve Chairman Jerome Powell held a monetary policy press conference.

Powell stated that as we approach the neutral interest rate, it may be appropriate to slow the pace of interest rate cuts, but we have just begun to consider adjusting the pace of rate cuts. The previously released inflation data is not bad, but indeed higher than expected. Regarding the recent surge in U.S. Treasury yields, Powell pointed out that it seems the movement of U.S. Treasuries is not driven by inflation being higher than expected.

During Powell's press conference:

• U.S. stocks fluctuated, then the gains expanded again, refreshing the day's high at one point.
• The yield on the 2-year U.S. Treasury bond briefly rebounded above 4.25%, then fell back to near the day's low of 4.1848%.
• At the beginning of Powell's press conference, the dollar's decline continued to narrow, but then expanded again
• After the press conference by Jerome Powell, the renminbi's gains expanded again. The offshore renminbi rose by 534 points against the US dollar, an increase of 0.74%, trading at 7.15 yuan, and reached a daily high of 7.1415 yuan at 23:55 Beijing time on Thursday. Traders still expect the renminbi to appreciate in the coming week and month.
• Bitcoin's gains once again expanded, reaching a historical high of $76,850, before narrowing its gains afterward.
• Precious metals saw an increase in gains. Spot gold rose over 1.7%, hitting a daily high of $2,705.20, having previously dipped to near $2,688 during the press conference. Spot silver's intraday gain reached 3.0%, trading at $32.12 per ounce.

Summary

Overall, the market's expectations for a rate cut by the Federal Reserve in December have retracted, but this did not hinder the upward trend of US stocks on that day. After experiencing a significant decline, US Treasuries stabilized and maintained intraday gains on Thursday, while the dollar fell. Bitcoin, after a significant pullback, reached a new high, and precious metals trended higher with substantial intraday gains.

The following chart shows the market's expectations for the Federal Reserve's rate cut in December:

The following chart shows the performance of US stocks on that day:

The following chart shows the recent performance of US Treasuries:

The following chart shows the performance of the dollar on that day:

The following chart shows the performance of Bitcoin:

The following chart shows gold, trending higher: