Fed Day: A Hawkish Cut… But How Hawkish?

E-mini S&P (December) / E-mini NQ (December)

S&P, yesterday’s close: Settled at 6848.25, down 7.50

NQ, yesterday’s close: Settled at 25,699.75, up 35.75

It is Fed Day, and according to the CME FedWatch Tool, there is an 89.9% probability the bank will cut by 25bps at 1:00 pm CT. With the cut a foregone conclusion, the committee’s messaging and Summary of Economic Projections will be critical, along with Fed Chair Powell’s tone during the press conference. Given Powell’s hawkishness at the October meeting, and the committee’s messaging in the following days, it is widely expected that this will be a hawkish cut. With that said, it may not be as “hawkish” as the market has begun to anticipate and this could bring opportunity in the aftermath.

The Employment Cost Index for Q3 is due at 7:30 am CT. In the news this morning is momentum around China’s large tech companies preparing for orders of NVDA’s H200 chips, however, there has been little to no impact on the market. ORCL and ADBE report after the bell.

E-mini S&P and E-mini NQ futures traded well after the opening bell yesterday morning but quickly lost traction and slipped in the back half of the day, and into settlement. Key resistance comes in at yesterday’s highs at 6868.50-6872.75, and in front of that at 6859.50. First support comes in at 6835.25-6836.25, helping to define the range of the week. Given yesterday’s muted tape and lack of overnight enthusiasm, it could trade a bit heavy early. Still, we will look for price action to firm back up ahead of the policy meeting if it can hold above our Pivot and point of balance in the E-mini S&P at….