Fed heavy meeting notes: suspension of interest rate hikes in December! The Dow rose more than 512 points to a new closing high, Powell's latest speech, what did he say?

On December 13, local time, the three major US stock indexes closed up. The Dow rose 512.3 points, or 1.4%, to 37,090.24 points, a new closing high. The Nasdaq rose 1.38% and the S & P 500 index rose 1.37%. The Nasdaq and S & P 500 indices reached new highs since the beginning of last year.

Precious metals, energy, and industrial raw materials sectors were among the top gainers, with most popular technology stocks rising. Apple rose 1.67% to a new closing high, with a market value of $3.10 trillion. Sunrun rose nearly 20%, Coldellan Mining rose more than 12%, Pan American Silver and Alcoa rose more than 8%, Barrick Gold and Ethel Gold rose more than 6%, and First Solar (000591) and First Energy rose more than 4%.

Popular Chinese concept stocks were mixed, with the Nasdaq China Golden Dragon Index up 0.42%. NIO and Weibo rose more than 2%, Vipshop, JD.com, Tencent Music, NetEase and Alibaba rose slightly. XPeng Motors fell 1%, Baidu, Bilibili, Pinduoduo, iQIYI, Li Auto, Futu Holdings and Manbang fell slightly.

COMEX silver futures continued to pull up more than 4%, now trading at $23.94/ounce. COMEX gold futures are up nearly 2%, trading at $2031.8/ounce.

WTI crude futures settled 1.25 per cent higher at $69.47 a barrel, while Brent crude settled 1.39 per cent higher at $74.26.

U.S. Treasury yields continued to decline, the U.S. 10-year Treasury yield fell to the lowest since August, the latest decline of 12.5 basis points, reported 4.08%; U.S. 2-year Treasury yields fell to the lowest since mid-June, the latest decline of 19.6 basis points, reported 4.537%.

According to CCTV News on December 14, local time on December 13, the US Department of Labor released data showing that after adjustment, the US producer price index (PPI) in November 2023 was the same as the data in October, up 0.9% year-on-year from the same period last year, falling short of expectations. It was previously expected to rise 1.0% year-on-year.

According to CCTV news, on December 13 local time, according to the Federal Reserve's latest FOMC (FOMC) monetary policy meeting notes,The Federal Reserve decided to slow the pace of interest rate hikes in December，Maintain the target range for the federal funds rate at 5.25% to 5.50%.

(Image source: Federal Reserve)

Compared with this resolution, investors are more concerned about the Federal Reserve's December economic forecast, especially the implied rate cut expectations of all monetary policymakers in 2024.bitmap". The data shows that the median forecast of FOMC members for the policy rate in 2024 is 4.6%, implying a 75 basis point cut in interest rates next year, slightly exceeding expectations. In addition, their median expectations for policy rates in 2025 and 2026 are 3.6% and 2.9%, respectively.

With the Fed showing better-than-expected gusto, the CME "Fed Watch" tool also showed traders upping their bets on a 2024 rate cut, with the combined probability of 125 and 150 basis points now reaching 60 per cent.

(Image source: CME)

Key points of the Federal Reserve's December FOMC statement:

The Federal Reserve left its target range for the federal funds rate unchanged at 5.25% to 5.5%, in line with market expectations.

The Federal Reserve's policy statement shows that the growth rate of the US economy has slowed from its strong growth in the third quarter.

The Federal Reserve's policy statement shows that job growth has slowed, but remains strong, and unemployment remains low.

The Federal Reserve's policy statement shows that U.S. inflation has slowed over the past year, but remains high.

The Fed's policy statement suggests that the pace of reduction in its holdings of Treasuries and MBS will remain unchanged.

On Wednesday (December 13), after the Federal Reserve released its last interest rate decision of the year, Federal Reserve Chairperson Powell held a monetary policy press conference.

Powell pointed out that the committee is proceeding cautiously and cannot explicitly rule out the possibility of raising interest rates now. This suggests that the Fed will not adjust the base rate in the short term, and previouslybitmapThe Federal Reserve is expected to cut interest rates three times next year.

Mr. Powell said he was prepared to tighten monetary policy further if the conditions were right and policymakers did not want to rule out further rate rises, although he saw little chance of a rate rise next year.

On inflation, Powell said the committee remains committed to its goal of reducing inflation to 2 percent, which, while still high, has eased significantly.

Powell added that the Federal Reserve is willing to cut interest rates even if there is no recession. And it won't wait for 2% inflation to cut rates because that would be too late, it would exceed the target, and it would take a while for policy to affect the economy.

Key points of Powell's speech:

The policy rate is at or near its peak; the Federal Reserve is prepared to tighten monetary policy further if conditions are right; and the Fed is unlikely to raise rates further.

The Federal Reserve discussed the timing of interest rate cuts at the meeting, and relevant discussions are still ongoing and decisions will be made cautiously; interest rate cuts are widely expected to be one of the topics of future discussions.

Wages are still slightly above levels consistent with 2% inflation; unemployment is very low, and overall labor market conditions continue to improve.

Inflation in the United States has slowed, but it remains too high; we have seen substantial progress in core inflation; and overall price levels have not yet come down.

There is little reason to believe that the US economy is now in recession, and the possibility of a recession next year cannot be ruled out; while inflation cools, the economy may avoid recession, which is the current situation.