The Federal Reserve is expected to cut interest rates by 75 basis points next year, causing a rise in US stocks, US bonds, and gold, while the US dollar takes a dive.

The Federal Reserve announced its interest rate decision for December on Wednesday, keeping rates unchanged for the third consecutive time. The dot plot released by the Fed indicates that the current rate hike cycle has been completed, and officials expect a 75 basis point rate cut by 2024, with the federal funds rate at 4.6% by the end of next year, significantly lower than the expected 5.1% in September. With the dovish signal from the Fed, US stocks, US bonds, and gold all rose, while the US dollar fell.

Before the release of the December interest rate decision by the Fed

The three major US stock indices rose by only 0.1% at most, the Philadelphia Semiconductor Index fell by 0.1%, and the banking index rose by 0.1%. Among the major tech stocks, Apple rose by about 1% and Tesla fell by 2.3%.

The ICE US Dollar Index rose by 0.08% to 103.90. The euro fell by 0.08% against the US dollar, and the pound fell by 0.41% against the US dollar.

Spot gold rose by 0.08% to $1981.07 per ounce, while silver fell by 0.57%.

WTI crude oil futures rose by 1.09% to $69.36 per barrel, Brent crude oil rose by 1.17%, and natural gas rose by 1.82%.

After the announcement of the Fed's interest rate decision, major assets responded quickly

The Fed expects a 75 basis point rate cut by 2024, boosting market sentiment.

The S&P 500 extended its gains to about 0.4%, the Dow rose by 136 points or 0.37%, the Nasdaq rose by 0.3%, the semiconductor index rose by 1.1%, and the banking index rose by 0.7%. MSCI's emerging market stock index narrowed its decline.

The two-year US Treasury yield plunged by about 8 basis points, hitting a daily low of 4.5353%, and a total decline of 18 basis points during the day.

The ICE US Dollar Index plunged by 60 points in the short term, hitting a daily low of 103.30 points, and a decline of over 0.4% during the day. Latin American currencies rose.

Gold prices rose by about $15, up 0.8% to above $1995 per ounce.

Oil prices fluctuated, with a slight increase in gains.

Ahead of Fed Chairman Powell's press conference

In the half-hour period after the FOMC statement was released and before Powell's speech, the trends of major assets further intensified. The Dow Jones Industrial Average rose by 226.46 points, or 0.62%, to close at 36,802.51 points. If this upward trend can be sustained, it is expected to reach a new closing high.

The two-year US Treasury yield widened its decline to 23 basis points, falling below the 4.5% mark to a low of 4.4997%. Swap contracts indicate that the Federal Reserve's policy rate will be below 4% until December 2024.

The US dollar fell 1% against the Japanese yen, closing at 143.99.

Spot gold broke through the psychological level of $2,000, rising more than 1.37% during the day.

January WTI crude oil futures closed up $0.86, or 1.25%, at $69.47 per barrel. February Brent crude oil futures closed up $1.02, or 1.39%, at $74.26 per barrel.

After Powell's speech, the intraday trends of major assets are maintained

Although Federal Reserve Chairman Powell stated at the press conference that he did not want to rule out the possibility of further interest rate hikes, he mentioned that the discussion on the timing of rate cuts has just begun. In terms of combating high inflation, progress has been made in core inflation.

Both the Dow Jones Industrial Average and the S&P 500 Index rose by more than 1% during the day. The Dow Jones climbed above the high of January 5, 2022, setting a new intraday record high. Apple's stock price rose 1.5% during the day, reaching a new all-time high of $198.23, with a market value of $3.07 trillion.

The yield on the two-year US Treasury fell by more than 30 basis points to 4.4244%. The yield on the five-year US Treasury fell below 4%, the lowest since July 20.

The US dollar index extended its decline, falling 0.85% during the day to 102.93.

The price of gold rose by approximately 1.9%, reaching a high of $2017.

Market continues to anticipate the Federal Reserve

During Wednesday's trading session, swap contracts showed that market expectations for a rate cut by the Federal Reserve in 2024 increased. Traders expect a rate cut of 130 basis points next year, compared to the previous expectation of 115 basis points before the policy statement was released, once again "anticipating" the Federal Reserve.