By Jamie McGeever
ORLANDO, Florida (Reuters) -Wall Street tumbled and Treasury yields rose on Thursday as expectations of a Federal Reserve interest rate cut next month faded rapidly, while the dollar also fell in a bleak session for U.S. asset prices.
More on that below. In my column today I look at the emerging parallels between the U.S. and Japan, and how both countries are deploying a rather unorthodox policy tool in the broader fight to mitigate sticky inflation – fiscal stimulus.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Odds of Fed rate cut in December on knife’s edge ashawks, doves face off 2. US government opens back up but deep political divisionsremain 3. European officials consider pooling dollars to lessenFed reliance after Trump shocks 4. How the yen tripped up investors…again 5. Markets face down 2025’s upheavals with puzzling ease:Mike Dolan
Today’s Key Market Moves
* STOCKS: A sea of red across US, the Americas and Europe.Asia rises, but likely to reverse Friday. Big three US indicespost biggest falls in a month. * SHARES/SECTORS: US consumer discretionaries -2.7%, tech-2.4%. Only energy rises. AI/tech bellwethers – Nasdaq, Mag 7ETF, Philadelphia semiconductor index, Nvidia – all set forbiggest 2-week fall since April. * FX: Dollar index -0.4%, its sixth decline in sevensessions. Colombian peso hits 5-year high before ending down 1%,bitcoin down 4% below $100,000 to lowest since May. * BONDS: US yields up 5-6 bps at the long end of thecurve, extending rise after a weak 30-year auction. * COMMODITIES/METALS: Oil recoups some of yesterday’ssteep losses, up around 0.5%. Gold -1%, silver -2%.
Today’s Talking Points
* December Fed cut now only 50-50
A Fed rate cut in December, which was a 90% certainty only a couple of weeks ago according to rates futures markets, is now a coin flip. The rapid shift in market expectations is such that the next fully priced rate cut isn’t until March.
Very broadly speaking, a split appears…
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