This morning at 3 AM, the Americans released the minutes of the November FOMC meeting. I took a look, and there are a few points worth noting.
The first is that if inflation rebounds, then interest rate cuts will be paused;
The second is that if the unemployment rate rises or the economy slows, interest rate cuts will accelerate;
The third is that the majority of voting committee members believe that a 25 basis point cut in December is appropriate.
In summary, everything will depend on inflation and employment data, a 55-45 split, I guess. After the minutes were released, CME also adjusted the probability of a December rate cut down to 66%. Additionally, tonight the Americans will release the PCE inflation data for October. Currently, both PCE and core PCE year-on-year forecast values are higher than the previous values, indicating that the market already expects inflation to rebound. Therefore, as long as any data tonight can match the previous values, it would be considered positive.
On the geopolitical front, last night the Israeli security cabinet approved the ceasefire agreement with Lebanon. Biden stated that both parties accepted the agreement, which will take effect at 4 AM local time on the 27th. The Israeli side will gradually withdraw the remaining troops, which is positive for the market, as seen by the significant drop in oil prices. This basically stabilizes the situation.
