The Federal Reserve has cut interest rates by 25 basis points to a range of 4.25-4.50%, its third consecutive reduction, marking a total of 100 basis points since September. The move was widely anticipated by markets and immediately followed the release of strong retail sales data.
Retail sales exceeded expectations, climbing 0.7% month-over-month, with economists suggesting holiday sales are tracking for a gain of just over 3% year-over-year from November 1 through December 24. This positive indicator has been seen as a sign that global growth and inflation are still on track.
However, geopolitical tensions have escalated following the assassination of a Russian general. Threats of a 10% tariff on all Chinese imports may also impact global growth and inflation.
The 10-year Treasury yield rose to 4.54%, while the 2-year and 5-year yields slid to 4.33% and 4.40%, respectively. In the cryptocurrency market, Bitcoin surged past $107,000 for the first time but declined to $97,300 by midday trading on Friday.
The Fed’s decision was seen as a response to weakening global growth and inflation concerns, with markets reacting cautiously to the news. Despite this, stocks still closed down significantly, with the Nasdaq falling 3.5%, the S&P 500 dropping 3%, and the Dow sliding 2.6 points, down over 1,000 points.
Overall, the Fed’s decision to cut interest rates further has been seen as a attempt to boost economic growth and prevent recession. However, the impact of this move on the markets is still uncertain and will be closely watched in the coming weeks.
Source: https://seekingalpha.com/article/4745679-alpha-picks-weekly-market-recap