Bitcoin Steadies, Reversing Recent Gains Amid Caution Ahead of Fed — Market Talk
0852 GMT - Bitcoin trades steady, reversing much of its recent gains. The cryptocurrency rose in recent days on the prospect of the U.S. Federal Reserve cutting interest rates in a decision due Wednesday. However, investors are mindful that the Fed's forecasts and messaging might be cautious regarding the prospect of further rate cuts. "Crypto's attempt at a rebound stifled," Louis Navellier of Navellier Markets says in a note. Prospects of a rate cut are "clouded by the expectations that the cut will be highly contentious internally," he says. Bitcoin trades steady at $92,644, having dropped back from Tuesday's three-week high of $94.621, according to LSEG data. ([email protected])0836 GMT - Eurozone government bond yields rise in early trade, but these increases could fade as the market shifts its attention to the Federal Reserve's policy announcement at 1900 GMT, where a rate cut is expected. "As the data calendar remains thin, Bunds should continue to stabilise in the European session, before the Fed takes centre stage in the evening," says Commerzbank Research's Erik Liem in a note. Money market forwards price in a 89% probability of a 25-basis-point rate cut, according to LSEG. Given the long-held expectation for a rate cut this month, investors will focus on the vote split and the Fed's projections. The 10-year Bund yield is up 1.6 basis points at 2.867%, staying close to the highest levels since March, according to Tradeweb. ([email protected])0833 GMT - European indexes are mixed as investors await today's policy decision from the U.S. Federal Reserve, which is expected to announce a 25 basis point cut. The Italian FTSE MIB is the biggest early mover--down 0.4%--as Leonardo and Banca Mediolanum hand back some of Tuesday's gains. Gains for semiconductor companies nudge the Dutch AEX up 0.06%, even as Aegon drops 7%. The Dutch insurer outlined plans to rename and relocate its headquarters to the U.S., though it will retain its Euronext listing. The U.K. FTSE 100 climbs 0.15%, pushed up by miners. Elsewhere, the French CAC 40 falls 0.2%, while the Spanish IBEX 35 and German DAX hold steady. ([email protected])0829 GMT - Yields on U.K. government bonds rise slightly as investors await the U.S. Federal Reserve's interest-rate decision due to be announced at 1900 GMT. Investors widely expect the Fed to cut rates for the third time in a row, but are increasingly uncertain about how much and how fast rates will fall from here. Analysts expect a cautious message from the Fed which could potentially lift Treasury yields. After Wednesday's Fed decision, however, focus will turn to next week's Bank of England decision, where a rate reduction is also anticipated. Ten-year gilt yields rise 1 basis point to last trade at 4.522%, Tradeweb data show. ([email protected])0826 GMT - Berkeley notes good levels of interest in its products throughout the first half, but it was constrained by economic conditions, notably interest rates, Quilter Cheviot analyst Oli Creasey says in a note. The house builder's management says interest rates were taking too long to adjust to the economic reality as it reports an 8% fall in sales volumes year-on-year. "While we have seen house builders comment on government policy recently, notably for demand-side stimulus, it is less typical to see management calling directly for interest rates to be lowered," Creasey says. Shares are up 1.9% at 3,648 pence. ([email protected])0813 GMT - The dollar edges lower ahead of Wednesday's Federal Reserve decision. It reverses some of its gains in recent days, which reflected expectations that the Fed could reduce interest rates but be cautious about prospects of further cuts in the coming months. Fed policymakers are likely to be cautious as this will mark the third consecutive rate reduction, but any boost to the dollar could be limited, ING's Chris Turner says. Markets are already widely anticipating a so-called "hawkish" rate cut, while the dollar could face pressure from weak jobs data next week and seasonal December weakness, he says. The DXY dollar index falls 0.1% to 99.082. It could rise to 99.60 but the rally might not last, Turner says. ([email protected])0754 GMT - Risks surrounding Wednesday's Federal Reserve's policy meeting are skewed towards less 'hawkish' commentary and a willingness to cut rates further, which would weaken the dollar, says ADSS's Neal Keane in a note. The dollar would fall, supported additionally by seasonality and end-of-year flows, while stocks and metals should rise, the head of global sales at the UAE-based trading platform says. The Fed announces a decision at 1900 GMT and is widely expected to cut the fed funds target rate by 25 basis points to 3.50%-3.75%. The dollar edges lower on Wednesday after rising in recent days, with the DXY dollar index last down 0.1% at 99.155. ([email protected])0751 GMT - Indonesia's consumer spending is likely to recover gradually next year after several quarters of slowdown, CGS International analysts say in a research report. Consumption in the middle- to lower-income segment will probably rebound as soon as 1H, aided by factors including the government's pro-growth agenda, followed by the middle- to upper-income segment toward end-2026, the analysts say. The brokerage upgrades the Indonesian consumer sector's rating to overweight from neutral given its recovery forecast. Its top sector picks are Mayora Indah, MAP Aktif Adiperkasa and Cisarua Mountain Dairy, which have buy ratings and target prices of IDR2,740, IDR1,010 and IDR7,700, respectively. Shares of Mayora Indah, MAP Aktif Adiperkasa and Cisarua Mountain Dairy last at IDR2,210, IDR720 and IDR5,850, respectively. ([email protected])0728 GMT - Food prices could continue to push a pickup in China's consumer-price index in the near term, ING economists say in a research note. Consumer inflation hit a 21-month high in November, helped by a surge in fresh vegetable prices, ING says. Food prices had been a "significant drag" on CPI this year, with year-to-date food inflation at -1.7%, ING notes. "Currently, pork prices (-15.0%) continue to weigh on food inflation, and this effect is likely to reverse next year," ING says, adding that China's consumer inflation could move back to positive territory for 2026. ([email protected])0721 GMT - The main debate at the current Federal Reserve meeting is likely to be over how close the Fed is to ending the easing cycle, say analysts at First Abu Dhabi Bank in a note. On this point, there will remain a lack of consensus, they say. Kevin Hassett--likely Trump's favoured candidate to replace Jerome Powell in May--could rally support for rate cuts, but there are growing calls for relative rate stability over the coming months, the analysts say. Hassett has said he would use his own judgement but has also said there is "plenty of room" to cut rates. Money markets price an 89% probability of a 25-basis-point rate cut later on Wednesday, according to LSEG. ([email protected])0701 GMT - U.S. Treasury yields edge lower in afternoon Asian trade, suggesting that investors have already positioned themselves ahead of the Fed's policy decision later in the day. A 25-basis-point rate cut is priced with a 90% probability, according to LSEG, with more focus on the Fed's projections and Chair Jerome Powell's comments. "The Fed will likely try hard to sound cautious and deliver some hawkish undertones, mainly because the Fed wants to keep maximum policy flexibility," MFS Investment Management's Benoit Anne says in a note. "This policy meeting may therefore fall in the category of a hawkish cut," he says. The two-year Treasury yield last trades 0.4 basis point lower at 3.608%, the 10-year yield is down 0.6 basis point at 4.179%, according to Tradeweb. ([email protected])0656 GMT - China's latest consumer price readings could offer some relief but concerns remain, Citi analysts say in a research note. The analysts note that current price improvement centered in selected consumer goods and upstream industrial sectors. The rise in vegetable prices could be short-lived after supply conditions normalize and the pace of gold price increase is unlikely to be sustained, they note. "There are concerns on how broad and how sustainable this mild exit from deflation could be," they say. Still, China's ongoing policy efforts, especially on the demand side, are warranted for sustainable reflation while the upcoming central economic work conference could offer more clues, they say. ([email protected])