In September, personal spending in the United States matched expectations, growing by 0.3%. This aligns with forecasts and reflects stable consumer activity during that period. <\/p>\n
Following a cooler PCE inflation report, the Dow Jones Industrial Average rose by 150 points. Meanwhile, gold prices remained stable at $4,200 amidst anticipation of potential federal rate cuts. <\/p>\n
The anticipation of the Federal Reserve’s decisions impacts market trends, with Bitcoin steadying above $91,000 and Ethereum maintaining levels over $3,100. Ripple, however, faced continued decline, trading at $2.06. <\/p>\n
The upcoming week is marked by expectations of a Fed rate cut, with dot plots and rhetoric being points of interest. Other central banks, including the RBA, BoC, and SNB, are also meeting, but surprises are not anticipated.<\/p>\n
With the Federal Reserve meeting just days away on December 10th, we see the market has almost fully priced in another rate cut. The CME FedWatch Tool is showing a greater than 90% probability of a 25-basis-point reduction, which would be the third in a row. Therefore, our focus should be less on the cut itself and more on the Fed’s forward guidance and the dot plot.<\/p>\n
The recent Personal Consumption Expenditures (PCE) data, which showed core inflation cooling to a yearly rate of 2.5%, supports this dovish stance. This easing price pressure gives the Fed cover to continue its cutting cycle, a policy shift that has been unfolding this fall. It reminds us of the major market pivot we saw back in late 2023 when rate cut expectations first began to build.<\/p>\n
Volatility expectations, as measured by the VIX index, have settled around 17, suggesting the market is not anticipating a major shock from the Fed. This environment may be favorable for selling options premium on the assumption the Fed delivers exactly as expected. However, buying cheap, out-of-the-money puts on major indices could be a prudent hedge against any unexpectedly hawkish surprise.<\/p>\n
The U.S. Dollar continues to show weakness, and we should expect this trend to persist if the Fed signals more cuts are coming. Options strategies on currency pairs like the EUR\/USD, which is pushing toward yearly highs near 1.1700, could be a direct way to play this theme. Bullish call spreads could offer a defined-risk way to capitalize on further dollar decline into the new year.<\/p>\n
Gold’s impressive strength at the $4,200 level is a direct result of falling real interest rates and a softer dollar. As long as the Fed remains on this easing path, the path of least resistance for precious metals is higher. We could use options on gold futures or related ETFs to maintain long exposure while managing the risk of a sharp reversal on any unexpected news.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" U.S. personal spending rose 0.3% in September; markets react to stable inflation and Fed outlook.<\/p>\n","protected":false},"author":62,"featured_media":17026,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36151","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36151","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36151"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36151\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17026"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36151"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36151"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36151"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}