US Federal Reserve Chairman Jerome Powell attends a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, US, November 7, 2024.
Annabelle Gordon Reuters
This report is from today’s CNBC Daily Open, our international market newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.
What you need to know today
US inflation is rising
Headline inflation in the US came in at 2.6% for October, in line with market expectations. Core inflation – which excludes food and energy prices – remained steady at 3.3%. The headline reading was higher than the Federal Reserve’s target, which could lead to Fed easing.
The market was little changed after the inflation data
U.S. markets were largely flat after October’s inflation reading, with the S&P 500 and Dow Jones Industrial Average rising just 0.02% and 0.11%, respectively. The Nasdaq Composite ended the day down 0.26%. In the Atlantic, the pan-European Stoxx 600 fell 0.13%.
Bitcoin continues to set new records
Bitcoin continued to set new records on Wednesday, quickly crossing the $93,000 mark as traders evaluated October inflation data. The cryptocurrency rose to a new record high of $93,469.08, before paring some gains, and ending up at $90,476, according to Coin Metrics. Trump, on the campaign trail, took a pro-crypto stance, promising to make the US the “crypto capital of the planet.”
AMD announces layoffs
Chipmaker AMD will cut 4% of its staff, or about 1,000 workers, as it tries to strengthen its position in the artificial intelligence chip space currently dominated by Nvidia. The company had 26,000 employees at the end of last year, according to a US SEC filing. AMD is the second largest manufacturer of graphics processing units, or GPUs, after Nvidia.
(PRO) Wells Fargo is cautious about Trump trades
Wall Street has poured money into so-called “Trump trades,” investing in companies and stocks tied to Trump’s campaign promises, but that doesn’t mean the bets will pay off, according to Wells Fargo Investment Institute.
Bottom line
Shakespeare famously said: “All the world is a stage, and all men and women are but actors; They have an exit and an entrance, and one person at a time plays many parts.”
With inflation readings in October in line with expectations, the stage is set for a final rate cut in December, bringing the Fed Funds rate to the central bank’s target of 4.25% – 4.5% which has been set in the “dot plot”. released in September.
It’s worth noting that the October reading was the first headline inflation to have risen since March, and the 2.6% figure was higher than the Fed’s 2% target.
So the path is less clear now for 2025. US President Joe Biden will leave the Oval Office on January 20, and President-elect Donald Trump will enter, with all his promises of tariffs and tax cuts.
One person then, who should play many parts will be Fed President Jerome Powell. Returning to the “dot plot,” the Fed in September expected rates to be cut by 100 basis points by the end of 2025, and another 50 bps by the end of 2026.
But, as economists say, Trump’s policies – if implemented – could be inflationary, and with the projected Republican trifecta – control of the presidency, the Senate and the House – it is unlikely that he will be able to deliver on what he promised. .
What this means is that the Fed could be forced to slow down or stop the easy path, if inflation rises again in Trump’s second term. In short, the term “high for again” can rear its head, once again.
