Market 12/13: FED officially ends rate hike cycle

FOMC 12/13: All FOMC members agree to cut rates in 2024

FED officially ends rate cycle in today's meeting with all FOMC members agreeing that end-of-2024 interest rates will be lower than current levels. Accordingly, the vote on rate cuts in 2024 is as follows:

0 cut: 2 votes
1 cut: 1 vote
2 cut: 5 votes
3 cut: 6 votes
4 cut: 4 votes
6 cut: 1 vote

10Y yield immediately pushed back to 4.00% while 2Y note drops 23bps, lowest since June.

Powell then in the press conference, although tried to clarify FED's stance on inflation, could not avoid clearly showing the dovish nature of the election year:

FOMC members believe rates have been raised sufficiently to the necessary level
FED remains determined to bring inflation back to 2.0%
FED will reconsider rate cut plans if data changes
QT will continue and this will become the main tool to curb inflation

PPI growth slowest in 3 years due to falling energy prices

November Producer Price Index slows, indicating easing inflation pressure.

Headline PPI reaches 0.9% YoY, lower than expected 1% - lowest since June.

Core PPI index (excluding food and energy) reaches 2% YoY, lowest since Jan 2021.

Requested prices (demand price) for most services and general goods unchanged for 2 consecutive months.

Energy sector deepest decline -1.2% MoM.

Based on November CPI and PPI, headline PCE inflation index expected to ease slightly from previous month.

Average forecast for core PCE growth: 0.06% MoM, 3.1% YoY.
Forecast for PCE growth over the next 6 months will be 1.9% YoY, lower than Fed's target.

Oil prices recover after drop - SPR oil reserves unexpectedly tapped without clear reason

According to DOE report:

Crude: -4.26 million barrels (expected -1.2 million barrels)
Cushing: +1.23 million barrels
Gas: +409,000 barrels (expected +1.9 million barrels)
Distillates: +1.49 million barrels (expected: +400,000 barrels)

Biden administration unexpectedly uses 6,000 barrels of oil from Strategic Petroleum Reserve SPR despite low oil prices.

Normally, oil reserve draws occur when oil prices are high.

Crude oil production unchanged in the week.

WTI is fluctuating around 69 USD.

Some other news:

Pfizer drops 8.3% to the lowest level since 2014 as vaccine demand declines, pushing 2024 revenue forecast down by 5 billion USD.
Tesla recalls 2 million cars (nearly all sold in the US) to fix Autopilot safety defect.

Market expects BoE to cut interest rates as UK economy enters recession.
- UK GDP declines -0.3% MoM in October.

FCC Commissioner Brendan Carr voices opposition after FCC says it will not subsidize Starlink with 886 million USD.
- He claims Elon Musk's companies are being harassed by government agencies.

Argentine President devalues Argentine peso and cuts spending to revive economy.
- Cost-cutting measures include: Suspending public works, cutting subsidies for transportation and energy sectors,...
- 800 Argentine pesos equivalent to 1 USD.