The market awaits Fed’s interest rates announcement this week on November 7th

According to the CME GROUP’s data, there was a high chance that the next Federal Open Market Committee (FOMC) meeting on November 6-7 would recommend a 0.25% interest rate cut by the Federal Reserve. The policy rate is expected to come down to 4.50% from 4.75%. 

Economists predicted that the upcoming FOMC meeting would continue voting for the rate cuts initiated in the Fed’s easing cycle that kicked off in September. More than 90% of economists polled by Reuters were confident that the Fed fund rates would be down to the 4.25%-4.50% range by the end of 2024. Nearly 80% of the economists projected that the Fed fund rates would reduce further to 3.0% to 3.50% by the end of 2025.

Crypto market watchers to closely monitor U.S. presidential elections 

Good morning from London! It’s 🇺🇸 Election Week!

📍 Current odds show DJ Trump leading the race
📍 Tuesday is Election Day—expect market volatility, especially in BTC, oil, and USD
📍 🇬🇧 and 🇺🇸 both expected to cut rates by 25bps on Thursday
📍 Key mid-cap earnings reports this… pic.twitter.com/9Cphjcwn5F

— Dr Alex Koh (@alexkoh) November 4, 2024

The pre-election crypto market volatility suggests that the 2024 U.S. presidential elections could be the most crypto-influenced yet. With the crypto community slightly leaning toward Trump, many hope that his victory and pro-crypto stance could solidify the use of U.S. dollar-pegged stablecoins in foreign trade. 

Crypto investors, including Mark Cuban, also continued to push for replacing U.S. SEC chair Gary Gensler, a stance strongly supported by Trump. A Bernstein September analysis report revealed that a Trump win could catapult Bitcoin price to over $80K. Meanwhile, memecoins such as the Dogecoin mentioned by Elon Musk during a few pro-Trump rallies could also be highly affected by election results.

Bitcoin’s upward movement matched pre-halving momentum as the crypto market reacted to the recent Fed rate cuts. 

Dritan Nesho, the CEO of HarrisX, stated that everything, including Trump’s win, was possible in a statistically tied election race. A new national poll conducted by Forbes and HarrisX showed that Kamala Harris had a slight edge over Trump in what could turn out to be the most closely contested elections in the United States history.

“The race is a statistical tie, and it’s going to be a squeaker of an election. Trump has gained in the national vote, but Harris has narrowed the race in the battleground states.”

–Dritan Nesho

Goldman Sachs predicted approximately six successive 25 bps rate cuts starting in November 2024 through 2025. Economists reported no indications of rate cut interruptions. Radix Financial’s Amy Hubble disclosed that the Fed’s lowered rate would affect markets differently and in ‘different magnitudes.’

Weak jobs report unlikely to affect the Fed’s rate cuts

Fed policymakers claimed there was a strong chance the Federal Reserve would cut interest rates despite a weak jobs report showing an unemployment rate rise from 3.4% to 4.1% over the past 18 months. Only 12k jobs were added in October, well below the projected 113K jobs. 

Nearly all Fed officials making public remarks about the last rate cuts expressed confidence in the unemployment rate at 4.1% and the reducing inflation to almost the desired 2%. According to San Francisco’s Fed President Mary Daly, there was no information suggesting the Fed wouldn’t continue reducing the interest rate.

Thomas Simons, the senior economist at Jefferies, said the current information did not suggest that the overall economy desperately needed easing, but 25 bps cuts were still expected in the next two FOMC meetings. Job creation and consumer spending looked particularly robust, while price pressures increased slightly since the initial Fed rate cuts in September.