The Market Brief
Hey team, U.S. futures pared earlier losses after the latest economic reports eased some worries that the Federal Reserve will be cautious about cutting interest rates this year.
Let’s recap yesterday’s session and see what’s next!
Impact Snapshot
🟥 FOMC Meeting Minutes - 2:00pm
Macro Viewpoint
U.S. stock index futures trimmed losses on Wednesday following a softer-than-anticipated private payrolls report for December, which tempered concerns that the Federal Reserve might take a cautious approach to cutting interest rates this year.
Earlier in the session, futures dipped further on news that President-elect Donald Trump is reportedly considering declaring a national economic emergency to impose new tariffs.
Investors are also awaiting the release of minutes from the Federal Reserve's December meeting at 2:00 p.m. ET, which could provide additional insights into the central bank's monetary policy outlook for the year ahead.
Federal Reserve Chair Jerome Powell has previously emphasised that future rate cuts are not guaranteed. If this stance is reaffirmed in today’s comments, it could trigger a further market downturn.
Prior Session Deep Dive
You will likely hear a lot of reasons as to why the market spiked 80 points lower yesterday, right at the open, with absolutely nothing holding it on the way down. Most traders would simply blame a significant move like this on a negative headline to explain why the market experienced this pullback.
Larger moves in the market happen because the stage is already set for them behind the scenes.
The references on the chart above, along with the context, were shared during the overnight session and prior to the U.S. open in our last market brief, at a time when no "news" or catalysts could have impacted the market.
A careful study of market structure is all you need to evaluate the environment. As we stated, the expectation for the downside was a significant move, with the market having plenty of room to cover. This resulted in a complete gap fill, landing right on our first downside pivot of the session, where we observed a bounce.
After a second attempt to sustain activity above this key area, the market broke down, targeting continuation. The absolute bottom of the session landed at the 5936 level, which coincided with the prior range midpoint. Following this, the market saw another 40-point bounce shortly afterward.
