Stocks hold ground as markets eye Fed rate cut

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“Everyone is expecting the Fed cut now … but what’s more important will be how many dissenters there will be,” said Nabil Milali, portfolio manager at Edmond de Rothschild Asset Management.

“It could be one of the first meetings in history where the decision could be split seven for a cut and five members against it, and that will be a huge signal for next year’s rate cut expectations.”

The Federal Open Market Committee has not had three or more dissents at a meeting since 2019, and it has happened just nine times since 1990.

JPMorgan’s head of U.S. economics Michael Feroli wrote in a note he expected at least two dissenters in favour of no action. Feroli also thinks the Fed will cut in January as insurance against a sustained weakening in the labour market, before going on a lengthy policy pause.

Hopes for more Fed stimulus have helped support equities in recent weeks, and both S&P 500 futures and Nasdaq futures were 0.1-0.2% firmer.

BONDS HAVE A LOT RIDING ON FED GUIDANCE

Government bond yields around the world continued to nudge higher, with Japanese government bond yields hitting fresh multi-year highs, as the Bank of Japan looks increasingly likely to hike rates next week.

The U.S. 10-year Treasury yield was up nearly 2 basis points at 4.15%, its highest in over two weeks, but was kept in check by expectations the Federal Reserve will cut rates this week.

The euro was a shade firmer at $1.1651 , just short of its recent seven-week high of $1.1682.

Gold stood at $4,213 an ounce , after spiking as high as $4,259 on Friday, while silver was just off a lifetime peak.

Oil prices declined on Monday as investors monitored ongoing talks to end the war in Ukraine, which could put downward pressure on prices.

Brent fell 1% to $63.09 a barrel, while U.S. crude also fell 1.1% to $59.43 per barrel.

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