Trusted by over 15 Million Traders
The Most Awarded Broker
for a Reason
CATEGORIES
News
- The US dollar ended its three consecutive days of decline, and stabilized around
- The darkest moment in the euro zone! Markets short the euro, betting on historic
- Trump stresses that Europe stops buying Russian oil, investors take profits to l
- Trade negotiations are becoming increasingly urgent, Trump says Powell is about
- The dollar fluctuates above the 98 mark, evidence of weak job market reappears
market analysis
Williams' statement reversed market expectations, and the probability of a rate cut in December quickly rose to more than 70%
Wonderful introduction:
If the sea loses the rolling of huge waves, it will lose its majesty; if the desert loses the wild dance of flying sand, it will lose its magnificence; if life loses its true course, it will lose its meaning.
Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market xmniubi.commentary]: Williams' statement reverses market expectations, and the probability of an interest rate cut in December quickly rises to more than 70%." Hope this helps you! The original content is as follows:
Before the morning trading on November 21, investors had almost ruled out the possibility of an interest rate cut at the Federal Reserve’s December 9-10 meeting. At the close of trading on Thursday (November 20), CMEFedWatchTool showed that the probability of cutting interest rates by 25 basis points was only 39.1%, and the probability of keeping interest rates unchanged was as high as 60.9%. Over the past week, the hawkish stance of many Federal Reserve officials has continued. Concerns about the stickiness of inflation, the one-time impact of tariffs that have not fully subsided, and the serious lack of key employment data due to the government shutdown have led to sharp downward revisions in market expectations. The 10-year U.S. Treasury yield once rose to 4.48%, and stock market futures generally opened lower. Dow futures fell about 0.3%, and Nasdaq 100 futures fell 0.5%. Risk assets were generally under pressure, reflecting the market's high consensus on the Fed's "skipping December."
At around noon on November 21st, Beijing time, New York Fed President Williams delivered a speech at the Centennial Celebration Meeting of the Central Bank of Chile, clearly stating: "The current monetary policy only constitutes a moderate restriction... I believe there is still room to further adjust the target range of the federal funds rate in the near future, bringing the policy stance closer to a neutral level, thereby maintaining a balance between the two major goals." As FOMC Vice Chairman, permanent voting member and Chairman Powell's closest policy ally, Williams's statement is regarded as a sign of great significance. Less than an hour after the speech was released, the probability of a 25bp rate cut in December displayed by CMEFedWatchTool rose sharply from 39.1% to a maximum of 75%. It stabilized in the 70%-73% range during the session and finally closed above 72%. The 10-year U.S. Treasury yield fell quickly by 8-12 basis points, and S&P 500 futures fell from theTurned up 0.6%, Nasdaq 100 futures expanded to 0.7%-0.9%, and Dow futures rose 0.4%.
Williams emphasized that the current federal funds rate (3.75%-4.00%) only constitutes a "moderate restriction". Although it is lighter than before, there is still room for further adjustment; the job market is cooling moderately, and the unemployment rate rose to 4.4% in September, which has returned to the non-overheating level before the epidemic, and employment has declined. The risk to the economy has exceeded the risk of upward inflation; although inflation progress has temporarily stagnated (core PCE is still about 2.75%), price pressure will be significantly relieved after the one-time impact of tariffs subsides, and there will be no obvious second-order effects; the Federal Reserve can continue to cut interest rates without damaging the maximum employment goal to achieve a balance between its dual missions.
On the same day, hawkish officials tried to fight back, but their market influence was obviously limited. Susan Collins, president of the Federal Reserve Bank of Boston, made it clear that the current policy stance is very appropriate and hesitant to further cut interest rates, emphasizing that the economic resilience is strong and inflation risks remain, and there is no need to rush to ease unless employment deteriorates rapidly. Dallas Fed President Lori Logan also reiterated that interest rates should be kept stable pending clear evidence of easing. Although the hawkish voices are coordinated, the market reaction shows that investors value Williams' weight - his permanent voting rights, New York Fed executive status and high consistency with Powell - far more than the rotating voting regional Fed chairmen. As a result, the yield curve continues to steepen, and interest rate cut expectations rise instead of falling.
After Williams’ speech, major investment banks quickly updated their models. Goldman Sachs raised the probability of an interest rate cut in December from 45% to 72%, calling it a key turning point, and maintained its forecast for another 75bp interest rate cut in 2026; Morgan Stanley emphasized that the dovish stance of the core decision-making circle (Powell-Williams) has not changed, and a 25bp interest rate cut in December has become the baseline scenario again, while raising the path for an interest rate cut in 2026; Evercor eISI bluntly stated that Williams' statement "vetoed" the hawkish noise in the past two weeks, and the December 25bp interest rate cut has basically been locked in; Barclays has raised the cumulative number of interest rate cuts from 3 to 4 times in 2025-2026, and the neutral interest rate range is expected to be 3%-3.25%; Deutsche Bank, UBS and other institutions have also followed suit, raising the probability of an interest rate cut in December to more than 70%.
This disagreement between the Doves and Eagles occurred against the special background of severe delays in key employment and inflation data - due to the recent government shutdown, the release of October non-agricultural and CPI data was postponed until after the December meeting, and the Federal Reserve decision-makers faced greater uncertainty. Private data showed employment slowing but not collapsing, while inflation was stuck due to a one-time hit from tariffs. Williams' statement was seen as a clear endorsement of the dovish stance. The hawks mainly xmniubi.come from regional Fed presidents, and the Washington Council is overall dovish, forming a power game under the Fed's unique structure.
From November 20th, “the December suspension is almost certain” to November 21st, “a 25bp rate cut returns to the baseline scenario and is close to full pricing”, only one core policymaker’s statement xmniubi.completely reversed the situation.market pricing. Currently, CMEFedWatchTool shows that the probability of a rate cut in December is stable at more than 72%. Investors' focus has turned to the extent of the rate cut (25bp is still more aggressive), the path to 2026, and the tone of Powell's December press conference, rather than whether to cut interest rates itself. Williams' move not only defused the recent collective pressure from hawks, but also proved once again that in the Fed's decision-making chain, the New York Fed president's weight far exceeds that of ordinary regional governors.
The above content is all about "[XM Foreign Exchange Market xmniubi.commentary]: Williams' statement reverses market expectations, and the probability of an interest rate cut in December quickly rebounds to more than 70%". It is carefully xmniubi.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Spring, summer, autumn and winter, every season is a beautiful scenery, and they all stay in my heart forever. Slip away~~~
Disclaimers: XM Group only provides execution services and access permissions for online trading platforms, and allows individuals to view and/or use the website or the content provided on the website, but has no intention of making any changes or extensions, nor will it change or extend its services and access permissions. All access and usage permissions will be subject to the following terms and conditions: (i) Terms and conditions; (ii) Risk warning; And (iii) a complete disclaimer. Please note that all information provided on the website is for general informational purposes only. In addition, the content of all XM online trading platforms does not constitute, and cannot be used for any unauthorized financial market trading invitations and/or invitations. Financial market transactions pose significant risks to your investment capital.
All materials published on online trading platforms are only intended for educational/informational purposes and do not include or should be considered for financial, investment tax, or trading related consulting and advice, or transaction price records, or any financial product or non invitation related trading offers or invitations.
All content provided by XM and third-party suppliers on this website, including opinions, news, research, analysis, prices, other information, and third-party website links, remains unchanged and is provided as general market commentary rather than investment advice. All materials published on online trading platforms are only for educational/informational purposes and do not include or should be considered as applicable to financial, investment tax, or trading related advice and recommendations, or transaction price records, or any financial product or non invitation related financial offers or invitations. Please ensure that you have read and fully understood the information on XM's non independent investment research tips and risk warnings. For more details, please click here