Event Reminder | Get Ready for 21:00 Tonight (Oct. 29th)
Real Estate Select Sector SP XLRE | 40.83 | +1.54% |
iShares U.S. Home Construction ETF ITB | 90.55 | +2.80% |
D.R. Horton, Inc. DHI | 137.22 | +3.54% |
Lennar Corporation Class A LEN | 86.84 | +2.31% |
State Street Financial Select Sector SPDR ETF XLF | 49.37 | +2.09% |
01
Federal Reserve's Upcoming Decision
On October 29, at 2:00 PM Eastern Time (9:00 PM in Riyadh), the Federal Reserve's Federal Open Market Committee (FOMC) will announce its interest rate decision. Thirty minutes later, Fed Chair Jerome Powell will hold a press conference on monetary policy.
The market anticipates a nearly 100% probability of a 25-basis-point rate cut, which would adjust the current overnight lending benchmark rate range of 4% to 4.25%.
02
Challenges Beyond the Rate Cut
While a rate cut decision may be straightforward, addressing complex issues remains challenging for the Fed. Key topics include:
- The future path of rate cuts
- Challenges due to a lack of economic data
- Timeline for ending the balance sheet reduction plan
The Fed's balance sheet mainly consists of U.S. Treasuries and mortgage-backed securities. These discussions reveal internal divisions regarding future monetary policy directions.
03
Gold Technical Analysis
Analyst Haresh Menghani from Fxstreet notes:
- Gold prices closed below the 38.2% Fibonacci retracement from the August to October rally, which may encourage gold bears.
- Momentum indicators suggest a continued downward trend unless prices rebound above the $4,000 level, potentially triggering short-covering and pushing prices toward $4,058-$4,060, and possibly $4,100.
Support levels include:
- Asian session low: 3,917−3,917−3,916
- $3,900 level
- Overnight low: $3,886
Breaching these supports could lead to testing the 50% Fibonacci retracement level at $3,844-$3,843, with further declines possibly reaching $3,800, $3,765-$3,760, and $3,720-$3,715.
04
Impact on the Stock Market
The Fed's October rate decision may significantly impact U.S. stock market volatility. Sahm Platform has systematically compiled nine rate-sensitive asset categories summarized by mainstream institutional analysts from CICC, JPMorgan, and others for investor reference:
05
Powell’s Fed: Divisions, Labor, and Balance Sheet
Powell's Challenge in Bridging Divides
Fed Chair Jerome Powell faces the task of bridging internal divisions within the FOMC.
- Some members advocate for rate cuts, while others are cautious.
- New Fed Governor Milan supports aggressive cuts, while others like Loretta Mester and James Bullard are hesitant.
Powell, stepping down in May 2026, aims to reconcile these differences, focusing on labor market conditions and broader economic activity.
Labor Market Concerns
Labor market concerns are driving expectations for further rate cuts. Despite limited data due to the government shutdown, inflation appears to be slowing, and layoffs are not accelerating.
Economist Luke Tilley predicts continued rate cuts into 2026, potentially lowering rates to a neutral range of 2.75% to 3%.
Data Shortages and Decision-Making
The government shutdown has created data shortages, complicating the Fed's decision-making. The absence of September’s nonfarm payroll report adds to the uncertainty, requiring the Fed to remain flexible.
Balance Sheet Reduction
Markets seek clarity on when the Fed will stop reducing its $6.6 trillion balance sheet. Powell has hinted that the end of quantitative tightening (QT) may be near, with liquidity tightening despite stable financial conditions. Analysts are divided on whether the Fed will announce an official end to QT soon.