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Today, as expected, the Federal Open Market Committee cut interest rates by 25 basis points. Committee members cited a commitment to achieving “maximum employment” and bringing inflation closer to its 2% target as reasons for the decision. It is the third straight cut in interest rates by the central bank, but forecasts show that committee members expect the pace of cuts to slow in 2025.

According to Reuters, the odds of another 25 basis point cut in interest rates in January are now 82%. Data From CME Group.

Committee members' projections published on Wednesday show that the average interest rate target by the end of 2025 will fall in a range of 3.75%-4%. This is 50 basis points higher than previous expectations.

The FOMC's forward guidance (see what we did there) was mostly unchanged from this week's meeting but a key phrase was added: "extent and timing."

“When considering the extent and timing “After making additional adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, evolving expectations, and the balance of risks.” statement He reads.

It's a decision we saw coming, so markets shouldn't be surprised. However, the “Trump trade,” the rally we have seen across the board since the election, appears to have begun Stopped. Stocks, with the exception of big technology companies, traded largely sideways for most of the month.

The S&P 500 is up just 0.2% since December 2. Meanwhile, the Nasdaq Composite rose about 3.7%. The return wasn't too bad, but it's still down from November, when the index rose about 6%.

What does it give? policy. And I'm not just saying that because I'm writing this Reagan International newsletter.

“Since Trump announced several unconventional things Ministerial nominationsTom Isay, founder of Sevens Report Research, said there was essentially an inverse relationship between cyclical stocks and the likelihood of these Cabinet nominations being confirmed. “Prior to Trump’s announcement of Matt Gaetz as Attorney General, Pete Hegseth as Defense Officer, RFK Jr. as Secretary of the Department of Health and Human Services, and Tulsi Gabbard as Director of National Intelligence, the market was steadily moving higher.”

The slowdown in Trump's rally has markets bracing for a rally Santa's poolas some analysts say. We're still a few days away from the true "Santa Rising Window" (the last five trading days of the year plus the first two days of the new year), and with the Fed's decision coming out as expected, a breakout in stocks and cryptocurrencies could be imminent.

The Dow Jones Industrial Average is currently on its longest losing streak since 1978 (nine days), but it historically declines before buying takes place, at least the vast majority of the time. As a reminder, this is not trading advice!

The S&P 500 fell 0.6% during today's session in the moments following the Fed's decision, and the tech-heavy Nasdaq Composite lost 0.6% after 2pm EST.

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