The economy is looking to the Fed

il y a 7 jours

The Fed has started its two-day policy meeting and is expected to cut interest rates by another 25 basis points. However, the focus will be on the Summary of Economic Projections (SEP) and dot plot, which provide guidance for interest rates in 2025.

While US Treasury yields and real yields both edged lower, the US dollar remained steady. The 10-year Treasury yield fell to 4.379%, while the DXY index rose 0.07% to 107.01.

On the technical front, gold prices maintain their long-term uptrend but are under pressure in the short term. The key support level now is $2,600/ounce, which corresponds to the 100-day simple moving average (SMA). A break of this level could send prices lower to $2,531 – the August 20 high. Conversely, if the price breaks above $2,650, the next target will be $2,670 (50-day SMA), and then $2,700.

In addition to the Fed’s decision, investors are awaiting the release of the core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, to gauge the future direction of policy. Signs that the incoming Trump administration may push for expansionary fiscal policy have raised expectations of a change in the Fed’s stance in the near term.