11.12.25 - Sounds like a pause

The US Federal Reserve (Fed) eased its monetary policy once again, lowering the federal funds rate by 25 basis points to a target range of 3.50–3.75%, the lowest level in three years. In addition, the Fed resumed purchasing government bonds, marking a notable shift toward renewed liquidity support.

However, despite this easing step, the central bank signaled little appetite for further rate cuts in the near term. The vote within the FOMC underscored a divergence of the committee members to continue.
Fed Chair Jerome Powell consistently framed the policy stance as one of strategic patience, repeating variations of “we are well-positioned to wait and see how the economy evolves.”

Markets: mixed picture

• Bonds: yields turning lower, US 10-year substantial lower at 4.12%

• Equities: mixed with tech leading to the downside after disappointing Oracle earnings

• Gold: back in focus with monetary policy uncertainties, above USD 4’250/oz

• USD: substantial lower

• Cryptos: slip with Bitcoin falling towards 89k

• Volatility: VIX edges higher for a fourth consecutive day

My View: Investors were hoping for a clearer signal that the rate-cut cycle would continue. Powell refused to offer it, therefore disappointed the short-term traders

The consensus narrative now leans heavily on the idea that the incoming Fed Chair will be more dovish, in line with political expectations from the new administration. But this raises a deeper, more uncomfortable question: How independent is the Federal Reserve? A scenario where markets assume political influence over monetary policy is fundamentally dangerous. Expectations can shift quickly and sharply if credibility becomes part of the debate.

On the positive side, the US economy continues to show resilience. Beneath the noise, activity appears firmer than many assume at first glance.

But the risk landscape is far from empty.
Tariffs could re-emerge as a major market driver at any moment in case the courts will announce their decision.

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