🤑 Fed Countdown: Bitcoin and Gold Hold Breath for December Decision!

Good Morning!

China's labor market is showing signs of resilience, with youth unemployment falling to 16.1% in November. The National Bureau of Statistics reveals a steady improvement from June's record 21.3%, reflecting potential economic stabilization. While the 16-24 age group sees significant improvement, broader challenges in domestic demand and the property sector persist.

In today’s email:

• FedWatch: All eyes on FOMC rate decision today

• Bitcoin: Consolidating as markets await The Fed

• Bitfinex: Bitcoin to $200K next year? 

• Gold: Another day another bank bullish on Gold

👇Join: Our exciting community subreddit to join the conversation:

THE BIG IDEA

The Federal Reserve prepares for a nuanced 25-basis-point rate cut, balancing economic signals and future monetary policy expectations

The Federal Reserve is set to make its most consequential monetary policy decision of 2024, with a 25-basis-point rate cut virtually guaranteed. This strategic move will trim borrowing costs to the 4.25%-4.50% range, completing the central bank's projected 100 basis points reduction for the year. However, the real drama unfolds in the forward-looking guidance for 2025.

Market dynamics have dramatically shifted since September. Initially, traders anticipated five rate cuts in 2025, but economic resilience and potential policy uncertainties have dramatically recalibrated expectations. Current projections suggest just two cuts, down from earlier optimistic forecasts. The incoming Trump administration adds another layer of complexity, with potential tariff, tax, and immigration policies that could unpredictably reshape economic landscapes.

Fed Chair Jerome Powell faces a delicate balancing act

He must communicate the central bank's commitment to data-driven decisions while managing market expectations. The December meeting's projections and Powell's post-announcement press conference will be meticulously parsed for any hints of monetary strategy.

Recent economic indicators, including a robust November retail sales report, complicate the narrative. The economy continues growing at a solid pace, unemployment remains low, and inflation, while moderating, still hovers above the Fed's 2% target. These factors make precise future monetary policy challenging to predict.

Financial markets are bracing for potential volatility. Stocks could experience wobbles as bonds rise, and currency markets could see significant movements as investors digest the Fed's nuanced messaging. The central bank's primary goal remains threading the needle between supporting economic growth and preventing inflationary resurgence.

MARKETS AT A GLANCE

TOP NEWS

Morgan Stanley's Mike Wilson advocates a balanced "barbell" investment strategy for 2025

Navigating potential market uncertainties with a mix of high and low-risk assets, Morgan Stanley's top strategist Mike Wilson recommends a barbell investment approach for 2025, balancing high-quality large-cap and cyclical stocks. With potential Trump-era policy shifts like corporate tax cuts and sweeping tariffs, investors should prepare for mixed market dynamics. The strategy aims to capture gains while hedging against economic uncertainties and potential market volatility.

UK inflation rises to 2.6% in November, marking the second consecutive monthly increase

With core inflation at 3.5% and persistent services sector price pressures challenging potential interest rate cuts, UK inflation climbed to 2.6% in November, matching economists' expectations. The rise reflects ongoing economic challenges, including energy price increases and a tight labor market. Core inflation remained sticky, dampening hopes for immediate Bank of England interest rate reductions and signaling continued economic complexity.

Middle East crude markets are experiencing tightening supply as UAE reduces sales and Iranian flows face sanctions, driving up prices for key regional oil grades

Middle East crude markets are constricting, with UAE sales curtailment and Iranian sanctions driving regional oil prices higher. Qatar's Al-Shaheen, Oman crude, and UAE's Murban grades are seeing increased premiums, signaling reduced availability for Asian importers and potential supply challenges in the global energy market.

CRYPTO

Bitcoin retreats to around $103,750, experiencing a 2% drop amid pre-Fed rate decision de-risking, with traders anticipating a potentially hawkish cut and reduced 2025 rate cut projections

Bitcoin takes a cautious pause after reaching record highs, with traders de-risking ahead of the Federal Reserve's anticipated rate decision. The cryptocurrency market awaits signals about potential 2025 rate cuts, with expectations of a more conservative monetary approach potentially impacting crypto asset valuations.

Bitfinex analysts predict Bitcoin could reach $145,000-$200,000 by mid-2025, driven by institutional adoption, spot ETF inflows, and potential market dynamics that could disrupt traditional crypto cycles

Bitfinex analysts forecast mild Bitcoin price corrections in 2025, with institutional demand supporting a potential price surge to $200,000. The projection hinges on continued ETF inflows, growing institutional adoption, and the possibility of a U.S. strategic Bitcoin reserve under the incoming administration, challenging historical market cycle patterns.

Bloomberg analysts predict multiple new crypto ETFs in 2025, including Solana and XRP funds

With SEC leadership transitioning under the incoming Trump administration, analysts Eric Balchunas and James Seyffart expect approvals for dual Bitcoin-Ethereum ETFs early next year, followed by Solana and XRP funds later under a more crypto-friendly SEC. While Litecoin and HBAR ETFs might debut sooner, demand remains uncertain. Optimism for broader crypto ETF adoption is fueled by the expected regulatory shift and growing institutional interest.

Galaxy Digital CEO Mike Novogratz predicts Bitcoin will surpass gold’s market cap within 5–8 years, citing record momentum and institutional adoption

Bitcoin's market cap hit an all-time high, now 14% of gold's $17.8 trillion valuation, fueled by a new price peak of $108,000 and surpassing gold ETFs in U.S. market assets. Novogratz’s optimism aligns with growing institutional confidence and recognition of Bitcoin as "digital gold," supported by favorable market trends and rising ETF adoption.

GOLD

Gold rallied 30% in 2024, supported by geopolitical tensions and central bank purchases, with a medium-term target of $2,700/oz in 2025

Despite consolidating, gold's downside remains limited by Middle Eastern conflicts, Syrian government instability, and renewed buying by the People’s Bank of China. Structural demand from central banks and market uncertainties provide long-term support, positioning gold for continued strength through 2025.

DAILY ECONOMIC CALENDAR (ET)

MEME OF THE DAY