This is a segment from the Forward Guidance newsletter. To read full editions, subscribe . The FOMC today, as expected, lowered interest rates by 25 basis points. Committee members cited a commitment to achieving “maximum employment” and getting inflation closer to its 2% target as reasons for the decision. It’s the central bank’s third consecutive rate cut, but projections show committee members expect to slow their pace of decreases in 2025. Odds of another 25bps cut in January are now at 82%, according to data from CME Group. Committee member projections published Wednesday show the median interest rate target by the end of 2025 falling in the 3.75% — 4% range. This is 50bps higher than previous projections showed. The FOMC’s forward guidance (see what we did there) from this week’s meeting was mostly unchanged but a key phrase was added: “extent and timing.” “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook and the balance of risks,” Wednesday’s statement read. It’s the decision we saw coming, so markets shouldn’t be surprised. Still, the “Trump trade,” i.e., the rally we’ve seen across the board since the election, appears to have stalled . Stocks, with the exception of Big Tech, have largely traded sideways for most of the month. The S&P 500 is up just 0.2% since Dec. 2. The Nasdaq Composite, meanwhile, has gained around 3.7%. Not too shabby of a return, but still down from November, when the index gained almost 6%. What gives? Politics. And I’m not just saying that because I’m writing this newsletter from Reagan International. “Since Trump announced several unorthodox cabinet nominations , there has basically been an inverse correlation between cyclical stocks and the likelihood these cabinet nominations get confirmed,” Tom Essaye, founder of Sevens Report Research, said. “Prior to Trump’s announcement of Matt Gaetz as AG, Pete Hegseth as Defense, RFK Jr. as HHS Secretary and Tulsi Gabbard as National Intelligence Director, the market was marching steadily higher.” The slowing Trump rally has markets poised for a Santa rally , some analysts say. We’re still a few days out from the true “Santa rally 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 in as-expected, a breakout in equities and crypto could be imminent. The Dow Jones Industrial Average is currently on its longest losing streak since 1978 (nine days), but historically slumps preempt runs, at least the vast majority of the time. As a reminder, this is not trading advice! The S&P 500 was down 0.6% over today’s session in the moments after the Fed’s decision, the tech-heavy Nasdaq Composite had also lost 0.6% just after 2 pm ET. Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter . Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter . Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more. The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
