What History Says About the Next Fed Rate Move | Metals Mine

  • What History Says About the Next Fed Rate Move

    From cmegroup.com

    Fed Chair Jerome Powell framed the move as a "risk management" action, citing emerging signs of weakness in the U.S. labor market, despite the unemployment rate standing at a relatively healthy 4.3% in August 2025. This scenario, where the Fed eases policy amid low unemployment, prompts an examination of past "adjustment" cycles and their implications for financial markets. Historical Precedent for the Fed's "Adjustment Cuts" Since the 1970s, the Federal Reserve has implemented a rate cut, viewed as an "adjustment" or "risk management" measure, only twice when the unemployment rate was below 4.6%: in 1998 and ... (full story)

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The Fool
Dec 3, 2025 8:38am
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Dec rate cut assumed a done deal and the rally for equities based on that is mostly baked in already. We are in a flat range the last week for equities. I could see that continuing until the FOMC next week, when all eyes will be on the dot plot and any discord within the committee. Skepticism about AI is not going away. Labor market pain is only going to get worse. The Mag7 did a huge heavy lift over the last 3 years, now running out of steam. If we get a hawkish Fed at the show next week, goodbye Santa rally.
The Fool
Dec 3, 2025 11:33am
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Yep I fully agree there are easy cases to be made for bullish action. Rate cuts coming, seasonality = Santa rally, rebound off pullback, what's not to like? I have hefty trades for an extension of SPX > 6900 and NDX >25700. We'll see what Friday brings, with inflation data coming out. If that is pretty tame, it helps the Fed's easing project, as they are defaulting towards cuts based on labor weakness.
The Doji
Dec 3, 2025 10:16am
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Quoting The Fool
Dec rate cut assumed a done deal and the rally for equities based on that is mostly baked in already. We are in a flat range the last week for equities. I could see that continuing until the FOMC next week, when all eyes will be on the dot plot and any discord within the committee. Skepticism about AI is not going away. Labor market pain is only going to get worse. The Mag7 did a huge heavy lift over the last 3 years, now running out of steam. If we get a hawkish Fed at the show next week, goodbye Santa rally.
Not so sure. I believe that AI has only just scratched the surface and there will be a massive growth in applications over the next year or so. There will be double digit growth in tech next year.
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peekay007
Dec 3, 2025 9:05am
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the effects of shutdown is gradually playing out on USD
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Ijhii85
Dec 3, 2025 12:27pm
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The Fed will likely remain data dependent, watching inflation, unemployment, job market trends, and possibly other risks (global economic conditions, financial stability).

At the same time If inflation remains sticky, rebounds or if economic growth holds up the Fed may pause even if the labor market weakens; the dual mandate means it balances both goals, not just one.
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Trader#8C42
Dec 3, 2025 10:22am
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Quoting The Fool
Dec rate cut assumed a done deal and the rally for equities based on that is mostly baked in already. We are in a flat range the last week for equities. I could see that continuing until the FOMC next week, when all eyes will be on the dot plot and any discord within the committee. Skepticism about AI is not going away. Labor market pain is only going to get worse. The Mag7 did a huge heavy lift over the last 3 years, now running out of steam. If we get a hawkish Fed at the show next week, goodbye Santa rally.
Theoretically I agree with you, but based on the actual history of US markets we could go not only higher, but much much higher before anything cracks.

You have to remember that this is a world where investors are more than happy to throw their money in GameStop at $400. The ai trade isn’t about fringe companies hoping to get lucky, it’s about the biggest most profitable companies on the world who are obviously monopolies and who happily exploit their monopoly power. These companies are printing profits at an incredible rate, there are no pets dot com here.

Every company in the world will have to spend money on ai, they will have no choice. Their competitors will use ai to reduce costs so everyone will have to.
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