DECISION DAY
Decision day is finally here as the Federal Open Market Committee (FOMC) is set to announce its decision on interest rates today at 1:00 PM CST. As highlighted previously the Federal Reserve is widely expected to lower interest rates after keeping them high for over a year, however, there is still uncertainty about whether the reduction will be a quarter-point or a bigger, half-point cut. Consequently, market forecasters predict varying scenarios for the rate adjustment, with some, like those at JPMorgan, expecting more aggressive cuts. Moreover, market participants are eagerly anticipating the release of the ‘Dots’ plot, which will showcase policymakers’ projections for future rate movements. In addition, the updated Economic Forecasts will also be closely watched, as it will provide insights into the Committee’s outlook on key economic indicators. Furthermore, Fed Chair Jerome Powell’s press conference at 1:30 PM CST, will also play a crucial role in communicating the rationale behind the decision, and it will potentially provide insights into the committee’s views on inflation, unemployment, and overall economic stability.
MIXED TRENDS
Bitcoin (BTC) has maintained its position above $60,000 this morning as global traders awaited the outcome of the U.S. Federal Open Market Committee (FOMC) meeting. The anticipation stemmed from expectations of interest rate cuts, with BTC up nearly 4% in the last 24 hours. Moreover, industry experts at SkyBridge Capital have predicted a potential record high for bitcoin amidst regulatory developments. Nevertheless, as there is uncertainty in regards of how much the cut is going to be, there were mixed movements in major tokens like ether (ETH) and dogecoin (DOGE), while the broad-based CoinDesk 20 (CD20) index showed a 1.1% rise. Furthermore, in other crypto news, the market experienced positive trends in assets like Sui, influenced by new launches and collaborations announced at the Token 2049 conference.
SURGE IN DEMAND
Last week, mortgage rates decreased, prompting a sudden spike in demand for refinancing. Anticipation of the Federal Reserve’s potential interest rate cut contributed to this shift, as mortgage rates tend to be influenced by policy decisions made by the Fed. The Mortgage Bankers Association reported a notable 14.2% increase in total mortgage application volume, with a particularly significant 24% surge in applications for refinancing compared to the prior week. Interestingly, applications for home purchases also rose by 5%, indicating a potential increase in homebuying activity despite being slightly lower than the previous year. Moreover, it is important to highlight that the lower mortgage rates have enhanced affordability for potential homebuyers, which in turn has sparked interest in the housing market. Overall, the current economic climate seems to be favoring both refinancers and potential homebuyers, with the outlook leaning towards increased mortgage activity driven by reduced rates and growing confidence in housing market stability.
THE NEW FAVORITE
Silver prices have surged, reaching over $31 per ounce, amidst growing interest from investors. This upward trend marks a significant milestone as silver has outperformed gold this year, with the gold-silver ratio indicating potential for further gains. Technical analysis suggests a bullish outlook, with historical peaks around $50 per ounce acting as important benchmarks. Goldman Sachs highlights the $32 mark as a critical level to watch, hinting at a possible multi-month breakout. Additionally, the demand for silver in chip fabrication, driven by the rise of artificial intelligence technology, adds another layer to the market dynamics. Overall, the recent rally in silver prices, fueled by historical trends, technical indicators, and evolving market demands, has sparked optimism among investors who are closely monitoring the metal’s performance for potential opportunities in the market.
INTERNATIONAL NEWS
In August, inflation in the UK maintained its stability overall, but there was a notable increase in prices within the services sector, a crucial area closely monitored by the Bank of England (BOE). This surge in services inflation to 5.6% was primarily driven by a significant spike in airfare costs, and while the overall consumer price inflation remained at 2.2%, matching expectations, the rise in service sector prices may influence the bank’s decision on interest rates. The market responded to this data by adjusting their expectations, with the pound strengthening and investors reducing their bets on an imminent rate cut. This cautious approach aligns with BOE’s recent rate cut in August, with a focus on monitoring wage growth as a factor driving inflation in the services sector. Nevertheless, despite this, economists still anticipate a gradual improvement in the sector, suggesting potential rate cuts in the upcoming winter months.
