Morning Macro 11th December
A dovish Fed cuts 25bp with renewed asset purchases (not strictly QE, but good for risk assets) saw equities jump (S&P500 +0.7%), the dollar fell (0.60%) and yields fell (2yr down -7bp). But suddenly overnight after dreadful Oracle earnings the markets have reversed, Oracle was down 11% after hours, Nasdaq futures are currently down (-1.2%), Bitcoin is down 3%, and Ethereum down -4%.
Silver makes another new all-time high, and gold sits on a key support line, overnight events should support precious metals. (Chart 1 gold, Bloomberg)
The Fed cut by 0.25% (with 3 dissents:1 cut, 2 hold, less than thought) and will resume ‘temporary’ T-Bill purchases. The dot plots still see one cut in both 2026 & 2027, thought the OIS prices 53bp cuts in 2026. The Fed is also getting more optimistic about the economy. Big revision up in GDP growth for 2026 with inflation cooling faster. Unemployment peaks at 4.5% this year, Inflation peaks at 2.9% this year, with GDP for 2026 is now estimated 2.3% (prior forecast was 1.8%). The Fed will also start “temporarily” buying $40B of T-bills per month. They say this isn’t QE, but a sign liquidity in the banking system is too tight. The Fed believes it has over done QT and needs to reverse it quickly because they are concerned about the reserve drain from April 15th, tax payments. It’s abundance of caution, but still, its adding liquidity to the markets.
Oracle currently carries $127B in debt, with $25B due within three years. Despite this, the company is free cash flow negative, reporting roughly –$13B over the past 12 months, and it’s not expected to be FCF + before 2028.
The dollar resumes its downtrend (Chart 2, dollar index, Bloomberg)
CHINA’S BEIJING STOCK EXCHANGE 50 INDEX EXTENDS GAINS TO 5%
Bloomberg forward looking indicator in inflation is showing renewed disinflation in the next 6 months, with core cpi goods trending back down by mid-2026.
The Indian Rupee is EVEN WEAKER than the dollar….. INDIAN CENTRAL BANK LIKELY SELLING U.S. DOLLARS TO HELP RUPEE AVERT SHARP FALL – TRADERS
Donald Trump latest economic insight. “Instead of a 4% GDP or 3% GDP, it should be able to be 20 or 25%. I don’t know why it can’t be.”…….. hhhhmmmmmmmm!
Goldman Sachs Asset Management just laid out its “10 for 2026” market roadmap
And Bank of America’s 2026 macro calls.
Data today – SNB rate decision
