evening wrap - the hawkish cut

market vibes

December 18 …)

“No one expected so much uncertainty to come out of that press conference.” Gundlach

The markets were uniformly expecting a 0.25 basis point cut today. They had been as close to certain as possible, yet when the cut was announced, everything went down with little restraint. One can only wonder why, when a certainty becomes certain, no one, apart from sellers of the Dow Industrials Stock Index for seven days running recently, acted ahead of it. At any rate, everything went down: stocks, metals, bonds, FX and bitcoin.

The only interest rate that went down was the one the FOMC controls. On the CBOT, interest rates for 2s, 5s, 10s, and 30-year notes and bonds made new contract lows. Elsewhere on the CBOT, January beans made new contract lows. On the Comex, gold and silver made new monthly lows. Stock indexes dropped like a Galileo gravity experiment.

More on that in a minute. First let’s look at lumber, the dollar, a bond market in trouble and try to figure out what’s next.