Global markets are bracing for a pivotal decision from the Federal Reserve, as internal disagreements within the FOMC threaten to complicate expectations for a third consecutive interest rate cut. Despite broad market anticipation and support from some economists, a dissenting bloc of five FOMC members could signal a more cautious approach to monetary policy. The outcome of the December 9-10 meeting is already impacting Wall Street, cryptocurrency markets, and international exchanges – including South Korea’s Kospi – as investors weigh the potential for continued easing against concerns about economic stability.
[속보] 연준 FOMC 매파적 금리인하 “내부충돌 5명 반란표 ” 뉴욕증시 암호화폐 “엔비디아 양자컴 폭발 “
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The Federal Reserve is facing internal disagreement ahead of its upcoming interest rate decision, with five members of the Federal Open Market Committee (FOMC) poised to oppose a 0.25% basis point cut. Investors are closely watching for a decision from Chairman Jerome Powell as the FOMC concludes its meeting on December 9-10.
The market broadly anticipates the Fed will lower interest rates for the third consecutive time this year. Financial Times reporting indicates that academic economists also expect a rate cut despite the internal divisions within the central bank. The potential for a rate decrease is occurring as the U.S. economy remains a key focus for investors globally.
Adding to the debate, Steven Myron, a Fed governor often referred to as “Trump’s economic advisor,” is advocating for a more aggressive 0.5% point reduction. Meanwhile, Jeffrey Schmid, president of the Federal Reserve Bank of Kansas City, has argued for maintaining current rates. The New York stock market, dollar exchange rates, treasury yields, gold prices, and cryptocurrencies like Bitcoin, Ethereum, and Ripple are all reacting to the anticipation surrounding the FOMC’s decision.
On December 10, the New York Stock Exchange closed with mixed results. The Dow Jones Industrial Average fell 179.03 points, or 0.38%, to 47,560.29. The S&P 500 edged down 6.00 points, or 0.09%, to 6,840.51, while the Nasdaq Composite gained 30.58 points, or 0.13%, to 23,576.49. A 25 basis point rate cut is widely expected, with the market now focused on the Fed’s outlook for future monetary policy.
The Russell 2000, which tracks small-cap stocks, rose 0.21% as lower interest rates typically benefit smaller businesses with increased access to capital. However, the Dow Jones was pressured by JP Morgan Chase, whose stock plummeted 4.66% following concerns about cost management. Wells Fargo and Bank of America also experienced declines, while Goldman Sachs and Morgan Stanley saw gains exceeding 1%. Walmart, after listing on the Nasdaq, saw its shares fall 1.35% despite positioning itself as more than just a retailer.
October’s Job Openings and Labor Turnover Survey (JOLTS) report showed an improvement in job openings alongside an increase in layoffs. The Labor Department reported 7.67 million job openings, exceeding market expectations of 7.2 million. Preliminary data from ADP indicated a weekly average increase of 4,750 jobs over the four weeks ending November 22. According to the CME FedWatch Tool, the market is pricing in a high probability – in the high 80% range – of a 25 basis point rate cut in December, with the possibility of only one further cut by April 2025. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose 0.27 points, or 1.62%, to 16.93.
South Korea’s Kospi index closed slightly lower on December 10, amid cautious trading ahead of the Fed’s interest rate decision. The index finished down 8.55 points, or 0.21%, at 4,135.00.
The index opened higher, rising to 4,172.64, but quickly relinquished gains, trading in a narrow range throughout the day. The won closed at 1,470.4 against the dollar, down 1.9 won from the previous day. Institutional and individual investors were net sellers, while foreign investors were net buyers.
Overnight, U.S. markets closed mixed. The Dow Jones Industrial Average and S&P 500 fell 0.38% and 0.09% respectively, while the Nasdaq Composite rose 0.13%. Investors are bracing for the FOMC meeting, anticipating a 25 basis point rate cut and closely monitoring potential commentary from Chairman Powell regarding the pace of future rate adjustments.
The market’s focus on the future path of interest rates, coupled with past divisions within the Fed, has heightened anticipation for the release of the Summary of Economic Projections (SEP) and the dot plot during the FOMC meeting.
SK Hynix saw a 3.71% surge to 587,000 won after reports surfaced that the company is considering listing its American Depositary Receipts (ADRs). Other major stocks generally declined, including NAVER (-1.41%), KB Financial (-1.19%), HD Hyundai Heavy Industries (-1.04%), Celltrion (-0.85%), and LG Energy Solution (-0.45%), while SK Square (0.31%) and Samsung Biologics (0.30%) saw gains.
The Kosdaq index rose 3.65 points, or 0.39%, to close at 935.00. Foreign investors led the gains, while individual and institutional investors were net sellers. ABL Bio (+9.02%), Samchundang Pharmaceutical (+5.27%), Peptron (+5.06%), Ligachem Bio (+3.11%), and Rainbow Robotics (+2.72%) were among the top gainers, while Pharmaresearch (-0.77%), HLB (-0.71%), and Boronoi (-0.68%) experienced declines.
Trading volume on the KOSPI and KOSDAQ reached 12.5721 trillion won and 10.173 trillion won, respectively.
On December 10, South Korean national bond yields generally rose. The yield on the 3-year national bond rose 1.1 basis points to 3.095%. The 5-year and 2-year yields rose 3.4 basis points and 1.9 basis points, respectively, closing at 3.336% and 2.901%. The 20-year yield rose 0.7 basis points to 3.383%, while the 30-year and 50-year yields rose 2.6 basis points and 2.0 basis points to 3.269% and 3.210%, respectively. The 10-year yield fell 8.2 basis points to 3.371%.
The bond market is closely monitoring the Federal Reserve’s policy rate decision. The Fed is expected to lower its benchmark rate by 0.25 percentage points to a range of 3.75%-4.00%. Market attention is focused on Chairman Powell’s comments and the outlook for future interest rates.
Foreign investors sold national bond futures, with 190 contracts for 10-year bonds and 1,425 contracts for 10-year bonds. This selling pressure reflects waning expectations for domestic rate cuts.
Kevin Hassett, Chairman of the White House National Economic Council, stated on December 8 that he believes further rate cuts may be necessary. “I think Chairman Powell would probably agree with me that we probably need to continue to lower rates somewhat, and that needs to be done carefully as we look at the data,” Hassett said in a CNBC interview.
Hassett also noted that the government shutdown has delayed the release of key economic data, but that upcoming employment reports will provide further clarity. He added that the Fed’s role is to monitor data and make necessary adjustments, and that it would be irresponsible to pre-commit to a specific course of action.
Hassett expressed confidence that real household income will increase next year, helping to alleviate public concerns about high prices. He pointed to tax breaks on tips and overtime pay, which he estimates will provide an additional $1,600 to $2,000 in income for eligible individuals.
Regarding President Trump’s plans to streamline regulations for the artificial intelligence (AI) industry, Hassett described it as a measure to help AI companies understand the rules of the game. He criticized some states for imposing overly strict regulations and seeking to extract money from AI companies. “This executive order will make it clear that there is only one set of rules for AI companies in the United States,” he said.
Hassett, who is also a potential candidate to succeed Jerome Powell as Fed chair, stated that the President is guaranteed to make a good choice. “If that choice is me, I would be happy to help the President do his job,” he added.
김대호 글로벌이코노믹 연구소장 tiger8280@g-enews.com
