The Market Brief
U.S. futures advanced during early trading on Thursday after the Federal Reserve delivered its first interest rate cut of 2025 and signaled that more are likely to follow soon.
Impact Snapshot
🟥 Unemployment Claims - 8:30am
Macro Viewpoint
As expected, the Fed delivered the first 25 bps cut after 5 consecutive FOMC meetings on pause, with the target range for the Benchmark Rate at 4%-4.25%.
Stocks rallied initially on the dovish Fed statement, which indicated two consecutive cuts for the remaining Oct and Dec meetings, but quickly reversed during Powell’s press conference.
Looking through the statement, there is acknowledgement of labor market weakness, as ‘job gains have slowed’ and ‘downside risks’ remain elevated, but also that inflation has moved up and remains somewhat elevated.
Overall, only a slightly dovish reaction function, with a cut delivered in support of job market weakness but not a firm commitment to a series of cuts.
How To Trade During Economical Releases
Most people think that when a catalyst hits the market, it’s “big buyers/sellers” that drive the moves. This couldn’t be further from the truth. It’s the retail traders that chase the markets in the direction of the economic release.
The context below is what our subscribers received during the market brief release yesterday at 5:00 AM ET. One day after the fact, it’s not possible to write something more accurate to describe the market’s behavior that followed.
To truly understand the above and see how it “really looks” on the tape, we’re using a heat map and DOM found in our Sierra Chart Suite.
Pay attention to how everyone is removing their limit orders 5 minutes prior to the 2:00 PM rates release, leading to any market buys that followed amplifying the volatility as liquidity becomes scarce. As this happens, we wait for the counter swing that follows, building confidence to trade in that direction once big sell orders come into the market.
Despite the volatility, being able to understand what’s going on under the hood can offer significant opportunities.