The PBOC held its one- and five-year prime lending rates unchanged. Asian markets were lower. The Nikkei 225 fell -0.29% and the Shanghai Composite gave up a modest -0.06%. European markets sold off. The DAX Index lost -0.43%. 10-year Bunds yield 2.287%. For 12/14 Baker Hughes reported that the U.S. rig count fell 5 to 755. November Personal Income was up +0.3%, Personal Consumption Expenditures rose +0.4% (slightly cooler than the +0.5% est.), and the PCE Price Index was a subdued +0.1% (vs. +0.2% est.), with YoY up from +2.3% to +2.4% (vs. +2.5% est.). Core PCE (the Fed’s favorite inflation indicator) was +0.1% vs. +0.2% est., with YoY at +2.9% and holding at a 7-mo high. December Consumer Sentiment was unchanged at the expected 74.0. 10-Year Notes yield 4.523%. The March US$ Index backed up -0.58% to 107.530. February Crude inched +0.10% higher to $69.46. February Gold rebounded +1.5% to $2,647.00. Bitcoin (related ETFs experienced the 2nd largest daily net outflow ever) fell to $92,263 but ended at $96,346. Congress is still maneuvering to stave off a shutdown. Today was triple-witching, along with S&P 500 rebalancing. An estimated $6.5T in notional value worth of options expired. Stocks were red overnight and into the open, then began an early surge to end firmly higher across the board.

With the US$ strengthening on the Fed’s somewhat hawkish stance, the Chinese yuan weakened to 7.3218. The Nikkei 225 lost -0.69% and the Shanghai Composite gave up -0.36%. European markets sank. The DAX Index lost -1.35%. 10-year Bunds yield 2.306%. For 12/14, Initial Claims subsided from 242K to 220K (vs. 230K est.), and MBA Mtge Apps went from +5.4% to -0.7%. Q3 GDP improved from +2.8% prior to a final print of +3.1% vs. +2.8% est., and Personal Consumption Expenditures was revised up from +3.5% to +3.7%. Nov. Existing Home Sales surged by +4.8% MoM (largest increase since Feb. 2024) vs. +3.0% est., (YoY sales are up +6.14% and the most since June 2021) and Leading Economic Indicators went from -0.4% to +0.3% (the first positive print since Feb. 2022) vs. -0.1% est. (see Looking Ahead). The Dec. Philly Fed Mfg. Index sank from -5.5 to -16.4 vs. +2.5 exp. The Dec. KC Fed Mfg. Index printed at -4. Q3 Corp. Profits went from +5.0% in Q2 to +9.2% in YoY gains. 10-Year Notes yield 4.575%. The March US$ Index added +0.34% to 108.110. Feb. Crude retreated -1.3% to $69.12. Feb. Gold sank -1.5% to $2,612.00. A govt. shutdown Friday is still looming. Stocks bounced after-hours and strongly rallied in the day to partially recover after yesterday’s dramatic plunge. By the close though, gains had evaporated.

Ahead of today’s Fed rate decision Asian markets were mixed. In Japan, exports grew more than expected while imports fell by more. The Nikkei 225 fell -0.72% while the Shanghai Composite rose +0.62%. European markets were near even to slightly stronger. The DAX Index slipped -0.02%. 10-year Bunds yield 2.249%. For 12/14 the MBA Mortgage Applications Index sank from +5.4% prior to -0.7% and EIA Crude Inventories fell by -0.9M bbls. The Q3 Current Account deficit widened to $-311.0B. November Housing Starts slipped from 1.312M to 1.289M (off -1.8% MoM vs. +2.6% est.) but Building Permits soared +6.1% MoM (vs. +1.0% est.) to 1.505M. The Atlanta Fed Business Inflation Expectations for December went from +2.2% YoY to +2.0%. After the FOMC meeting, as expected, the Fed Funds Rate was cut 25 bps to 4.25% - 4.5%. 10-Year Note yields are 4.515% (highest since May). The March US$ Index surged +1.05% to 107.775. February Crude faded -0.32% to $69.43. February Gold sank -2.1% to $2,607.00. House Speaker Johnson unveiled a Continuing Resolution to keep the US govt. funded through March 14. AMZN Teamsters are threatening warehouse strikes ahead of Christmas. The FOMC Statement suggested a slower approach to easing (see Looking Ahead) and markets sold off hard.