Fed’s Fresh Forecast: Revised Projections Rock the Markets!

December 18, 2024

Hello, my Friends!

What a ending for global markets…

We started as an FOMC event turned into a full-blown market meltdown, and volatility skyrocketed across the board.

It was the perfect time to focus on the major indices, as we saw some truly jaw-dropping moves after the decision:

US Interest Rate Decision Actual 4.5% (Forecast 4.5%, Previous 4.75%)

Fed Speaker Jerome Powell had a few things to say:

  • “We can be more cautious as we consider more adjustments.”

  • “Reducing policy restraint too slowly could unduly weaken the economy and employment.”

  • “Housing services are steadily coming down.”

  • The ''extent and timing'' language shows we are at or near point of slowing rate cuts.

Are the bears back?

In the short and even medium term, the recent price action might suggest so… but let’s not forget the bigger picture - when we zoom out, the markets have maintained a healthy uptrend since 2022.

Fear Mode

Today’s action showcased the raw power of the VIX, the market’s “fear gauge” and a key hedging tool used by institutions.

We witnessed one of the largest spikes in the year, soaring over 85% - a nearly record-setting percentage increase!

Now, the big question heading into the new year: Has bullish sentiment been shaken by the shift in the rate cycle toward cuts?

The upcoming January trading sessions will reveal whether this is a mere bump in the road or the start of a new market narrative.

Stay tuned!

FOMC Impulse: Nasdaq (-4.35%)🏦

  • FOMC Cuts Rates by 25 bps, Markets Plunge from Record Highs

  • Fed Signals Fewer Future Cuts: Only Two More in the New Year

  • Bond Yields Spike as Market Reassesses Interest Rate Outlook

  • Powell’s Press Conference: Optimistic Economy, Committed to 2% Inflation

  • Major Indexes Tumble: Dow -2.58%, S&P -2.95%, Nasdaq -3.56%, Russell 2000 -4.39%

  • “Soft Landing” Achieved? Inflation Sideways, Labor Market Cooling Orderly

  • Next Fed Move Not Until March: Markets Brace for More Data & Policy Shifts

  • 524 (0DTE Highest Level of Put Gamma)

  • 539 (0DTE Highest Level of Call Gamma)

  • 535 (0DTE Positive/Negative Shift)

  • 528 (1 Day min - Extreme Range)

0DTE Levels are key zones of significant options volume that can drive increased volatility as expiration nears, recalculated daily based on gamma expiration, trading volume, and market volatility.

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Until next time,
Steve B
Founder, The Daily Impulse

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